Technical Analysis

Near-term view is negative for MCX-Lead

Gurumurthy K BL Research Bureau | Updated on December 20, 2018 Published on December 20, 2018

The Lead futures contract on the Multi Commodity Exchange fell in the past week as expected. The contract has declined decisively below the key 21-day moving average support level of ₹139 per kg. It is currently trading at ₹137 per kg.

The near-term bias is negative. A crucial support is in the ₹132.5-133 region which is likely to be tested in the coming days. Whether the contract breaks below ₹132.5 or not will be key in deciding the direction of next move.

If the MCX-Lead futures contract manages to bounce from the ₹132.5-133 support zone, the downside pressure would ease. In such a scenario, a relief rally initially to ₹138 is possible. A further break above ₹138 will then increase the likelihood of the upmove extending towards ₹143 thereafter.

On the other hand, if the MCX-Lead futures contract breaks below ₹132.5, the downside pressure will increase. Such a break can take the contract initially lower to ₹130. A further break below ₹130, will then increase the possibility of the contract tumbling towards ₹125 or even ₹122 over the medium term.

Traders can stay out of the contract until a clear trade signal emerges.

Global trend

The Lead (three-month forward) contract on the London Metal Exchange is continuing to trade in a sideways range. The contract has been stuck in between $1,900 and $2,020 per tonne over the past few weeks. Within this range, the contract fell to a low of $1,922 and has bounced from there. It is currently trading at $1,964 per tonne.

The LME-Lead contract is likely to retain its sideways move for some more time. An upmove to test $2,000 and $2,020 — the upper end of the range is likely in the near term. A breakout on either side of $1,900 or $2,020 will determine the direction of the next move.

(Note: The recommendations are based on technical analysis and there is a risk of loss in trading)


Published on December 20, 2018
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