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The continuous contract of lead on the Multi Commodity Exchange (MCX) has gained a little over 15 per cent year-to-date. While it rallied during the first few weeks, the contract faced selling pressure in mid-February after facing resistance at ₹183 levels. The price had dropped to ₹157 levels in March. Then the contract resumed the uptrend again, but failed to surpass the resistance of ₹183. Thus, looking at the daily chart, the contract was active until the end of April wherein it witnessed few price swings.
However, since May, the contract has been sluggish and remained largely directionless. Notably though, the price has not fallen and the action since the beginning of the year shows that it has been forming higher lows, showing a bullish signal. In early July, the contract again dropped a little and currently it is hovering above the 50-day moving average, which lies at ₹176. This already being a support, is a good base for the contract.
The relative strength index (RSI) is showing a fresh uptick and the moving average convergence divergence (MACD) indicator on the daily chart, which has been moving south, is shifting its trajectory upwards. Also, the average directional index shows that the bulls are stronger than the bears. These are positive signs and given that ₹176 is a strong support, traders can considering buying lead futures (August expiry) as a short-term opportunity. Stop-loss can be at ₹176 and it can be expected to touch ₹183.
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