The July futures contract of lead on the Multi Commodity Exchange (MCX) has been in an uptrend since the beginning of June, after it broke out of the consolidation phase, that is, between ₹132 and ₹137, within which the contract was stuck in April and May. Currently, the price is well above the 21-day moving average (DMA) and the price movement on the daily chart is hinting at a continuing uptrend.

Corroborating the bullish bias, the daily RSI is rising along with the price, staying above the midpoint level of 50. The MACD indicator on the daily chart, which showed some sort of weakness previously, has now started to extend its upward trajectory — an indication of bulls regaining traction. On the whole, the contract is likely to remain biased towards bullishness as long as it remains above ₹140.

As the contract appears bullish, the price is likely to gain further from current levels. While the price area between ₹148 and ₹150 can be the immediate hurdle, a breakout of this price band can take the contract to ₹155. On the other hand, if the contract softens, it has support at ₹140, which coincides with the 21-DMA. A break below this level has the potential to change the near-term outlook where the price could be dragged to ₹137.

On the global front, the three-month rolling forward contract of lead on the LME, which saw its price soften last week, has taken support at $1,750. Since the prevailing trend is bullish, it is likely to resume the rally which could also positively impact the contract on the MCX.

Trading strategy

The contracts on the MCX and the LME have been rallying since the beginning of June and the price action suggests more appreciation in the upcoming sessions. So, traders can be bullish and initiate fresh long positions on MCX-Lead on declines with stop-loss at ₹140.

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

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