Technical Analysis

MCX-Lead in consolidation mode

Akhil Nallamuthu BL Research Bureau | Updated on May 19, 2020 Published on May 19, 2020

The May futures contract of lead on the MCX has been in a consolidation phase since the past two months, oscillating between ₹129 and ₹137. The price has been witnessing a decline since the beginning of the month, but the support at ₹129 is acting as a cushion, arresting a decline below this level. Currently trading at ₹131.6, the contract has lost about 14 per cent for the year.

As the contract continues to remain below the 21- and 50-day moving averages, the inherent bias is towards the downside. The daily RSI’s midpoint level of sub-50 corroborates it. But the MACD indicator on the daily chart is staying flat in the negative territory.

On the back of the prevailing bearish momentum, if the contract breaches the lower boundary of the range at ₹129, it is likely to fall to ₹122. A break below that level can drag the contract to ₹118. On the contrary, if the contract breaks out of the upper boundary of the range at ₹137, it will immediately face a hurdle at ₹140, which coincides with the 38.2 per cent Fibonacci retracement level of the previous downtrend. Beyond that level, resistance can be spotted at ₹145 and ₹150.

On the global front, the three-month rolling forward contract of lead on the London Metal Exchange (LME) faced selling pressure last week. The price has been declining and is currently testing the key support at $1,600. If the price slips below that level, a fresh round of selling can be expected. This could bring down the price of the contract on the MCX as well.

Trading strategy

While the major trend of the metal is bearish, the respective futures contracts on the MCX and LME are hovering around a support level. So, traders can initiate fresh short positions if MCX-Lead decisively breaks below ₹129. Stop-loss can be placed at ₹136.

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

Published on May 19, 2020

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.