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The Lead futures contract on the Multi Commodity Exchange (MCX) has risen sharply in the past week. After hovering at ₹165 per kg in the initial part of the week, the MCX-Lead futures contract has surged over 3 per cent. It is currently trading at ₹170 per kg.
The strong rally in the past week has taken the contract well above a key trend-line resistance level of ₹167.5. This level will now act as a strong support for the contract. The short-term outlook will remain positive as long as the contract trades above ₹167.5. A rally to ₹174 is likely in the near term. A strong break above ₹174 will then increase the likelihood of the contract extending its up-move to ₹178.
The outlook will turn negative only if the contract breaks below ₹167.5 decisively. Such a break can drag the contract lower to ₹164 or ₹163. The 21-day moving average at around ₹163 is a key short-term support for the contract which is likely to limit the downside. If the contract breaks below this support, the down move can extend to ₹160 or ₹159.
Trading strategy
Short-term traders can go long at current levels and also accumulate on dips at ₹168. Stop-loss can be placed at ₹166 for the target of ₹178. Revise the stop-loss higher to ₹172 as soon as the contract moves up to ₹173.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.
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