The Lead futures contract on the Multi Commodity Exchange (MCX) extended its fall to test the ₹160-₹161 support zone as expected in the past week. However, this support zone has halted the down-move and the contract has reversed sharply higher. The contract made a low of ₹160.1 on June 21 and surged about 5 per cent from this level to make a high of ₹168 on Wednesday. But, the contract has come-off slightly from this high and is currently trading at ₹167 per kg. The fall in the Indian rupee against the US dollar over the last one week has also supported the MCX-Lead futures contract moving sharply higher.

Outlook

The recent bounce from the low of ₹160.10 is technically significant. This upward reversal has happened from the 21-week moving average support which is poised at ₹160.10. This leaves the near-term outlook as positive.

An immediate support is at ₹166 and the next key support is at ₹164.5. As long as the contract remains above these supports, the outlook will remain bullish. The current up-move can extend to ₹170 in the coming days. A strong break above ₹170 will then increase the likelihood of the contract extending its rally to ₹172 or even ₹174 in the coming weeks.

If the contract breaks below ₹164.5can drag the contract lower to ₹160 once again. However, the outlook will turn bearish only if the MCX-Lead futures contract breaks below ₹160 decisively. In such a scenario, the contract can fall to ₹157.5 initially. Further break below ₹157.5 will then increase the possibility of the contract tumbling towards ₹150 over the medium term.

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

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