Lead futures on the Multi Commodity Exchange (MCX) has largely been trading in a sideways pattern over the past month. Now, there are signs of a rally from the current level.
The October futures has been fluctuating in the narrow range of ₹180 and ₹186. But the price action shows that it has been forming higher lows within the price band.
Also, the contract has moved above both 20- and 50-day moving averages, and the recent upswing in price is corroborated by a good increase in volume.
In early trade on Thursday, lead futures (October) moved above ₹186, increasing the odds of an upswing in price. We expect the contract to rally from here and touch ₹196 in the near-term.
In case the price declines from the current level, the contract can find support at ₹183 and ₹180. A break below ₹180 can turn the trend bearish. Until then, participants can take a bullish approach.
Trade strategy
Buy lead futures now at ₹186.50 and on a dip to ₹183. Place a stop-loss at ₹180. When the contract rises to ₹190, revise the stop-loss to ₹186. Tighten the stop-loss further to ₹190 when the price hits ₹193. Book profits at ₹196.