Technical Analysis

MCX-Lead charts a sideways trend

Akhil Nallamuthu BL Research Bureau | Updated on March 31, 2020 Published on March 31, 2020

The price of lead mini has been weakening since the beginning of the year. The April futures contract of Lead Mini on the Multi Commodity Exchange (MCX) which was at ₹153 at the beginning of the year has declined to current market price of ₹132.

Notably, for the past few trading sessions, it has been consolidating in a tight range between ₹129 and ₹134. But, until the contract trades below ₹135, it is likely to remain bearish. Moreover, the price remains below 21- and 50-day moving averages (DMAs), indicating that the prevailing trend is bearish.

The Moving Average Convergence Divergence (MACD) indicator on the daily chart stays in the negative territory. But it hints at bears losing momentum. The daily Relative Strength Index (RSI), though remains below the mid-point level of 50, has been flat during the past week.

Amid bearish trend, ₹129 is acting as a good support. Falling below that level, could drag the contract to ₹125. Further decline can drag the contract to its prior low of ₹117.3. On the other hand, if the contract breaks out of ₹134, it will face 21-DMA resistance at ₹138. Above that level, it can rally to ₹142.

On the global front, the three-month rolling forward contract of lead on the London Metal Exchange (LME) has been in a downtrend since the start of the year. But, it has recently bounced from the support at $1,600. There might be a short-term rally if the contract manages to take out the resistance at $1,700 as it can be a trend-deciding level for the near term.

Trading strategy

The overall trend of the metal in MCX and LME is bearish; however, there are signs of bears losing strength. Hence, traders can temporarily stay on the fence and initiate fresh short positions with a stop-loss at ₹135 if the contract slips below ₹129.

Published on March 31, 2020

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