MCX-Lead (₹152)

The price of lead has been in an uptrend since the beginning of June. Consequently, the August futures contract of lead closed in the green for the past three weeks and pierced above the important level of ₹150 last week. Even after a price correction on Friday, the contract closed above ₹150 and the bullish bias remains as the price lies above the 21-day moving average (DMA).

Substantiating the positive outlook, the daily relative strength index has been rising along with the contract and it stays in the bullish region. The moving average convergence divergence indicator in the daily chart is in an upward trajectory and lies in the positive territory. Also, the daily average true range is increasing as the price advances – indicating considerable momentum.

Notably, the price area between ₹148 and ₹150 can be a support band. The 23.6 per cent Fibonacci retracement level coincide at ₹150, making it an important support. So, until the contract stays above these levels, the bulls are expected to be in charge. Considering the above factors, the contract is likely to rally further and cross above ₹155.4 – its prior high. Above that level, it can rise to ₹160. On the other hand, if the contract weakens and slips below the support band i.e. ₹148-₹150, it might moderate towards the support at ₹143. Subsequent support is at ₹138.

On the global front, the three-month rolling forward contract of lead in London Metal Exchange (LME) has been rallying since mid-May. Last week, it broke out of its previous high and $1,900 and registered a fresh seven-month high $1,937. The price action is bullish and the contract is likely to appreciate further.

Trade strategy:

The trend of MCX-Lead continues to be bullish, which is substantiated by the global trend of the metal. Against this backdrop, traders can initiate fresh long positions on declines with stop-loss at ₹147.