The price of lead has been rising since the beginning of June. Consequently, the September futures contract of lead in Multi Commodity Exchange (MCX), which was trading around ₹135 in early June, started to rally. Last week, it registered a fresh high of ₹159, gaining a little over 17 per cent since June. It has now moderated to near ₹156.

Whatsoever, the price stays above the 21-day moving average (DMA) and it has been forming higher highs, indicating good upside momentum. Along with this, the daily relative strength index is in the bullish zone and the moving average convergence divergence indicator in the daily chart is tracing an upward trajectory. So, the contract retains the positive bias and until the price stays above ₹150, the bull trend is less likely to face any threat.

With the prevailing bullish bias, the contract might rally from current levels and cross over the prior high of ₹159 and advance to ₹165 in the near-term. On the other hand, if the contract weakens, ₹153 i.e. the 21-DMA can be the immediate support. Below that level, it can test the crucial support of ₹150.

On the global front, the three-month rolling forward contract of lead in London Metal Exchange (LME), which has been rallying since mid-May, went past the psychological level of $2,000. But it has now softened to $1,985. Yet, the trend is bullish and the contract is likely to gain traction and rise further in the forthcoming sessions and this can positively impact the contract in MCX.

Trading strategy:

The overall trend of lead is bullish and this is reflected in a similar manner in the price action of the contracts in MCX and LME. As they continue to move higher, the bulls appears to be comfortably placed, which can result in further rally. So, traders can initiate fresh long positions in MCX-Lead in declines with stop-loss at ₹152.

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