The June futures contract of lead on the Multi Commodity Exchange (MCX) rallied throughout last week and closed at ₹139.9. As a result, it broke out of the consolidation range between ₹131 and ₹138, within which it had been oscillating since the beginning of April. This has turned the near-term outlook positive for the metal. The contract is likely to remain positive as long as it stays above ₹133.

The price is well above the 21- and 50-day moving averages (DMAs), hinting at a bullish bias. Substantiating this, the daily relative strength index (RSI) has moved up in tandem with the price; it is also staying above the midpoint level of 50. Also, the moving average convergence divergence (MACD) indicator on the daily chart, which has been in an upward trajectory, has entered the positive territory.

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On the back of the prevailing bullish momentum, the contract is likely to firm up further. The immediate hurdle can be seen at ₹147. Above that level, ₹150 appears to be a resistance. On the other hand, if the contract gives up the gain and slips back below ₹138, it might moderate to ₹131, which is an important support. A break below that level can intensify the sell-off and may drag the price to ₹120.

On the global front, the three-month rolling forward contract of lead on the London Metal Exchange (LME) rallied last week and moved above the critical resistance band of $1,700 and $1,720. Hence, the contract is likely to gain further towards $1,800 and will have an upward bias as long as it remains above $1,700. This can positively influence the contract on the MCX.

Trading strategy

The contract on the MCX and the LME has witnessed a fresh breakout, opening the door for further strengthening. So, traders can be bullish and initiate fresh long positions in MCX-Lead on declines, with stop-loss at ₹133.

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

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