The lead futures contract on the MCX has been volatile in the past week. The contract fell 2.6 per cent in the initial part of the week and made a low of ₹143.6 per kg on Monday. However, the contract has reversed sharply higher from the low recovering most of the losses. It is currently trading at ₹147 per kg.
The bounce-back in the past week is technically significant as it has happened from the key ₹144-143 support zone. This leaves the near-term outlook bullish for the contract. The region around ₹144 will continue to provide support and limit the downside. As long as the contract trades above ₹144, a rally to ₹152 is likely in the near term. Inability to breach ₹152 can drag the contract lower to ₹147 and ₹145. But a strong break and a decisive close above ₹152 will boost the momentum. Such a break will then increase the likelihood of the contract targeting ₹158 and ₹159 in the coming weeks.
The 100-day moving average around ₹144 is a key support for the contract. The outlook will turn negative only if the contract declines decisively below this support. The next target is ₹140.
Global trend
The lead (3-month forward) contract on the LME has risen sharply after oscillating around $2,100 per tonne for most part of last week. The level of $2,100 will now act as a good support. As long as the contract trades above this support, an upmove to $2,200 is possible in the near term. A decisive break and close above $2,200 will be bullish. It will confirm the rounding bottom pattern visible on the chart. In such a scenario, a fresh rally to $2,400 can be seen over the medium term.
The bullish outlook will get negated if the LME-Lead contract declines below $2,100. The next target is $2,060.
(Note: The recommendations are based on technical analysis and there is a risk of loss in trading.)
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