Commodity Calls

Supports can limit the downside in MCX-Lead

Gurumurthy K | Updated on January 09, 2018


The Lead futures contract on the Multi Commodity Exchange (MCX) has managed to bounce higher after falling initially in the past week. The contract fell to a low of ₹146.9 a kg on Monday and has reversed higher from there. It is currently trading at ₹151.3 . The 200-day moving average at ₹147 has halted the contract’s sharp fall that happened from the high of ₹161.5 recorded on August 17. The 200-day moving average will be a key support to note. As long as the contract trades above this support, there is high possibility of it to test the resistance at ₹156 in the coming days. Inability to break above this hurdle can keep the contract range bound between ₹147 and ₹156 for some time.

The 55-day moving average is on the verge of crossing above the 200-day moving average. This is a bullish signal indicating that the downside could be limited as of now. As such there is a strong likelihood of the contract breaking above ₹156 in the coming days. Such a break can take the contract higher to ₹160 again. Further break above ₹160 will pave way for the next targets of ₹163 and ₹165. Traders with a short-term perspective can make use of dips to go long at ₹148. Stop-loss can be placed at ₹145 for the target of ₹154. Revise the stop-loss higher to ₹149 as soon as the contract moves up to ₹151.

The outlook will turn negative only if the contract declines below the 200-day moving average support decisively. In such a scenario, the contract can fall to ₹145 or ₹143.

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

Published on August 31, 2017

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