The price of August futures contract of lead on Multi Commodity Exchange (MCX) has been rallying since the beginning of June with intermittent corrections. Recently, the contract moderated to ₹150.8, from where the price bounced and is currently hovering at its prior peak of ₹155.4.

Since the price stays above the 21-day moving average (DMA), the contract retains the positive outlook. The daily relative strength index, which came off its peak last week, has resumed moving up along with the price and the moving average convergence divergence indicator on the daily chart continues to trace an upward trajectory.

Also, the contract can be inclined to upward direction as long as the price trades above the support band between ₹148 and ₹150. The 23.6 per cent Fibonacci retracement level of the rally coincides at ₹150, making it a good base. The prevailing positive bias can take the contract above the prior high of ₹155.4 and can push it to ₹160. On the other hand, if the previous high acts as a resistance and the contract descends on of the back of it, the price band ₹148 and ₹150 can be the nearest support. A break below these levels can drag the contract to ₹143.

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On the global front, the three-month rolling forward contract of lead on London Metal Exchange (LME) rallied on the back of the support of $1,900 last week. Currently trading at $1,950, it is likely to surpass the previous high of $1,972 since the overall trend is bullish. Above that level it can move towards $2,000.

Trading strategy:

The trend of contracts on MCX and LME continues to be bullish. The prospect for the bulls are good in MCX-Lead until the price remains above ₹150. The positive view is corroborated by the global price trend as well. So, traders can buy the contract with stop-loss at ₹148.

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