The Lead futures contract on the MCX seems to be gaining momentum. The contract has surged 3.5 per cent in the past week breaking above the key 100-day moving average resistance level of ₹142.6 per kg. It is currently trading at ₹144.5 per kg.
An immediate resistance is near current levels at ₹145. The MCX-Lead futures contract is likely to breach this hurdle. Such a break can take the contract higher to ₹149 and ₹150 in the coming days.
The 100-day moving average at ₹142.6 will now act as a key support. Intermediate dips, if seen, is likely to be limited. The outlook will turn negative only if the contract breaks below ₹142.6. The next target is ₹140. A further break below ₹140 will then increase the likelihood of the fall extending towards ₹137 or even ₹135 thereafter. However, such a sharp fall looks less likely at the moment as the indicators on the charts are giving positive signals.
The 21-day moving average has crossed over the 55-day moving average. This is a positive signal indicating that the downside could be limited and the current upmove is likely to continue. As such, this leaves the possibility high of the contract breaking above ₹145 in the coming days.
Trading strategy
Traders can make use of dips to go long at ₹142 and ₹140. Stop-loss can be placed at ₹138 for the target of ₹149. Revise the stop-loss higher to ₹144 as soon as the contract moves up to ₹146.
Global trend
The outlook for the Lead (3-month forward) contract on the London Metal Exchange (LME) is positive. The contract has risen breaking above the psychological resistance level of $2,000 per tonne. It is currently trading at $2,027 per tonne.
The region between $2,000-$1,990 is a strong support. As long as the contract trades above this support zone, there is a strong likelihood of it rallying towards $2,075 in the coming days.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading