The Lead futures contract on the Multi Commodity Exchange of India (MCX) has risen sharply in the past week breaking above the key resistance level of ₹145 per kg as expected. The contract made a high of ₹151.2 on Monday but it has slightly come off from there. The contract is currently trading at ₹148 per kg.

The 200-day moving average at ₹149 is restricting the contract from further upmove. As long as the contract trades below this resistance, an intermediate pull-back move to ₹145 is likely in the near term. A fall below ₹145 looks less probable at the moment as fresh buying interest is likely to emerge at lower levels.

An eventual break above the 200-day moving average resistance will boost the bullish momentum. Such a break can take the contract higher to ₹150 and ₹151 again. A further break above ₹151 will then increase the likelihood of the contract extending its rally towards ₹155 and ₹157 levels.

The bullish outlook will get negated if the contract declines below ₹145 decisively. In such a scenario, a fall to ₹143 or ₹142 is possible.

Trading strategy

Traders can make use of dips to go long at ₹146. Stop-loss can be placed at ₹142 for the target of ₹154. Revise the stop-loss higher to ₹148 as soon as the contract moves up to ₹151.

Global trend

The Lead (3-month forward) contract on the London Metal Exchange (LME) made a high of $2,129 per tonne on Monday. It is currently trading at $2,090. Resistance is at $2,130. As long as the contract trades below this hurdle, a dip to $2,030 is likely in the near term and a range-bound move between $2,030 and $2,130 can be seen for some time. A strong break above $2,130 is needed for the current uptrend to resume and trend to $2,100.