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The December futures contract of lead on Multi Commodity Exchange (MCX), that broke out of the resistance at ₹148 in late October, witnessed a strong rally. As a result, the price touched ₹160 last week.
However, the rally stalled wherein the contract was largely consolidating around ₹160 as this level acted as a hurdle. But following this, the bulls regained traction and breached ₹160 last Friday, opening the door for further strengthening.
Bullish trend
Since the overall trend is bullish, the break of ₹160 increased the likelihood of the contract advancing further. Supporting the bullish view, the price is well above the 21-day moving average (DMA) and also, 21-DMA crossed over 50-DMA.
Moreover, the daily relative strength index looks steady, though its fast approaching the over-bought territory and the moving average convergence divergence indicator on the daily chart has been tracing an upward trajectory and has moved further into the positive territory.
On the back of above reasons, the contract is likely to head to ₹170 in the near-term. A breakout of this level can take the price to ₹175. From the current levels, the immediate support can be spotted at ₹160. Subsequent support can be seen at ₹154 – its 21-DMA.
On the global front, the trend is positive for the metal as indicated by the three-month rolling forward contract on the London Metal Exchange (LME) i.e. the likelihood of further rally is high.
Hence, traders can be bullish and buy MCX-Lead futures in declines with stop-loss at ₹158.
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