The lead futures contract on the Multi Commodity Exchange (MCX) has been consolidating sideways for the past one month. Following a medium-term downtrend, the contract found support at its 52-week low, recorded at₹137 a kg in mid-August 2018.

Since then, the contract has been trending upward. Within this uptrend, the contract has been in a sideways movement in the band between ₹142 and ₹152. On Monday, the contract surged 2.4 per cent breaching the 21- and 50-day moving averages. Currently, the contract trades near the upper boundary at ₹151.7 with a positive bias.

The daily relative strength index is on the brink of entering the bullish zone from the neutral region and the weekly RSI feature in the neutral region.

The daily as well as weekly price rate of change indicators feature in the positive territory implying buying interest. A conclusive break-out of the upper boundary can strengthen the uptrend that has been in place since mid-August. In such a scenario, the contract can extend the up move to ₹155 and then to ₹157 in the short term.

A further rally beyond ₹157 can take the contract northwards to ₹160, which is a key medium-term resistance level.

Inability to move beyond ₹152 could keep the contract range-bound for a while. Key supports within the range are at ₹147 and ₹145.

On the other hand, a decisive plunge below the lower boundary at ₹142 can drag the contract down to ₹140 and ₹137.

Traders with a short-term perspective should remain on the sidelines as long as the contract is range-bound. Fresh long positions can be initiated on a decisive rally above ₹152 with a fixed stop-loss.

Note: The recommendations are based on technical analysis and there is a risk of loss in trading.

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