The continuous futures contract of lead on the Multi Commodity Exchange (MCX) witnessed a downwards trend during the latter part of February after marking a high of ₹181.3.
In the ensuing three weeks, the futures price dropped by 13 per cent and touched ₹157 levels. But then the bulls reacted quickly and turned around the trend up. After a brief period of consolidation, the futures have started to rally and they moved past ₹170 last week.
The price action on the daily chart looks positive and the likelihood of a rally from here is high.
Supporting the bullish bias, the daily relative strength index is has been moving upwards along with the price and the moving average convergence divergence indicator on the daily chart continues to chart an upward trajectory. The average directional index shows that the momentum favours the bulls and moreover, the price is above both 21- and 50-day moving averages (DMAs).
Traders can be bullish on lead and initiate fresh long positions in May futures with stop-loss at ₹168. Since the 21-day moving average lies at ₹168, this can be a good support and as long as the futures remain above this price, the trend will be inclined to upside.
While ₹175 is a minor hurdle, the contract is likely to breakout of this level and touch ₹180 in the near-term. Above ₹180, the immediate resistance can be ₹185.