The September futures contract of lead in Multi Commodity Exchange (MCX), which was in an uptrend since June, now looks to be witnessing a minor correction. It registered a high of ₹159 before a couple of weeks and has been gradually declining. The contract is now hovering around the 21-day moving average (SMA) at ₹155.
Since the contract has dipped a bit, the indicators are showing weakness. The daily relative strength indicator has been inching down along with the price and the moving average convergence divergence indicator in the daily chart is now pointing downwards. Nevertheless, both the indicators are in their respective positive territories. Also, the overall trend is bullish and as long as the price remains above ₹150, the uptrend is less likely to be violated. If the bulls pick up momentum and rallies from here, ₹160 can be a hindrance. But a breakout can attract fresh buyers where the contract can be expected to advance to ₹165. On the other hand, if the contract continues to weaken, ₹150 will act as a strong base. A break below this level can be critical as this could turn the trend bearish, at least in the near-term. Support below ₹150 can be seen at ₹145.
On the global front, the three-month rolling forward contract of lead in London Metal Exchange (LME), seems to have entered into a consolidation phase for the past two weeks i.e. it has been oscillating between $1,955 and $2,010. Though the trend is positive, the contract should cross over $2,010 to confirm the next leg of trend.
The contract in MCX has been inching down recently. However, the overall trend is bullish and ₹150 is a strong support. So, traders can either buy with a stop-loss of ₹145 if the price softens to ₹150 or buy with a stop-loss at ₹154 if the contract breaks out of ₹160.
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