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The Lead futures contract on the Multi Commodity Exchange (MCX) extended its rally in the past week as expected. The contract has surged over 5 per cent in the past week thereby confirming the end of the downtrend that was in place since February. It has also moved above a key long-term resistance level of ₹146 a kg and is currently trading at ₹148.75 . A decisive weekly close above ₹146 this week can boost the bullish momentum.
The next key resistance is at ₹151 which is likely to be tested in the coming days. Inability to break above this hurdle can trigger a corrective fall to ₹147 and ₹146. This pull-back move from ₹151 is more likely as the contract has risen sharply in a very short-span of time. However, such a down move is more likely to bring in fresh buyers into the market at lower levels. So the downside could be limited to ₹146 in the coming days.
As such an eventual break above ₹151 will increase the likelihood of the contract rallying to ₹155 and ₹158 thereafter.
Traders with a medium-term perspective can make use of dips to go long at ₹146. Stop-loss can be placed at ₹143 for the target of ₹155. Revise the stop-loss higher to ₹148 as soon as the contract moves up to ₹150.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading
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