Commodity Calls

MCX-Lead: Go long above ₹155

Akhil Nallamuthu BL Research Bureau | Updated on September 07, 2020

The September futures contract of lead in Multi Commodity Exchange (MCX) has been sliding over the past couple of weeks, after it registered a high of ₹159 in mid-August. Last Thursday, it marked a low of ₹151 has now inched up. The 50-day moving average (DMA) coincide at this level, making it an important support from the short-term trend perspective. But since ₹155 is a resistance level, the bulls might take a pause before going ahead with the upswing backed by the overall uptrend.

Since the price has been falling over the past two weeks, the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) indicators in the daily chart followed suit. But now the RSI is showing a fresh uptick and the indicator, already being in the bullish region, hints that the uptrend might quickly gain traction. On the other hand, the MACD, which was moving downwards is indicating that the downswing is losing momentum. Notably, it lies in the positive territory.

If the bulls gathers momentum and lift the contract above ₹155, it will most likely advance to ₹158. A clear breach of that hurdle can result in the price rising to ₹161. But if the contract is unable to gain traction and weakens below the key support of ₹151, there can be a sharp decline to ₹145.

On the global front, the three-month rolling forward contract of lead in London Metal Exchange (LME) slipped below $2,000 last week. The contract is currently hovering around $1,960 but the trend can be inclined to upward as long as the price remains above the support of $1,900.

Trading strategy

Though the contract in MCX is attempting for a recovery, it faces a hindrance at ₹155. Also, globally the price has declined from its recent peak. Considering these factors, traders can go long in MCX-Lead with stop-loss at ₹151 if price breaks out of ₹155.

Published on September 08, 2020

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