Commodities

MCX Lead bounces from crucial support levels

Gurumurthy K BL Research Bureau | Updated on February 15, 2018

The Lead futures contract on the Multi Commodity Exchange (MCX) has made a smart recovery in the past week.

With this rally, the threat of a sharp fall after breaking below the crucial support level of ₹163 per kg in the week earlier has eased.

The contract made a low of ₹160.2 on Thursday last week and has reversed higher from there. It is currently trading at ₹166.

The upward reversal in the past week suggests that the contract lack fresh sellers to drag it below ₹160. Moreover, this also indicates the emergence of strong buyers at lower levels.

As long as the contract trades above the ₹163-162 support region, the near-term view will be bullish.

A cup and handle pattern is on the making on the charts. This leaves the possibility high of the contract rallying towards ₹170 and ₹172 again.

An eventual break above ₹172 will then take the contract further higher to ₹174 and ₹175.

Short-term traders with a high-risk appetite can go long on dips at ₹165 and ₹164. Keep the stop-loss at ₹160 for the target of ₹172.

Revise the stop-loss higher to ₹167 as soon as the contract moves up to ₹169.

The outlook will turn negative only if the contract makes a decisive close below ₹163. In such a scenario, the contract can fall sharply to ₹155 on the back of profit booking.

Note: The recommendations are based on technical analysis and there is a risk of loss in trading.

Published on February 15, 2018

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