The lead futures contract on the Multi Commodity Exchange (MCX) remains sideways between ₹179 and ₹198 per kg since September last year. After a low of ₹180.60 per kg on Monday, it is attempting to bounce back and is currently trading at ₹182.5.
For now, the sideways range remains intact, with a high likelihood of moving up within the range in the next few weeks. Intermediate resistance is at ₹188. A strong break above it will pave way for a test of ₹198 — the upper end of the range.
Traders can go long at current levels. Accumulate longs on dips at ₹180. Keep the stop-loss at ₹177. Trail the stop-loss up to ₹186 as soon as the contract moves up to ₹190. Move the stop-loss further up to ₹191 as soon as the contract touches ₹194.
Book profits at ₹196. The outlook will turn bearish only if the contract makes a decisive break below ₹179. Such a break will mark the end of the strong uptrend in place since April 2020. It will then drag the MCX lead futures contract down to ₹171-170 initially.
From a medium-term perspective, the break below ₹179 can increase the danger of the contract falling to ₹160-155 in the coming months. On the other hand, for the current uptrend to resume, a decisive break above ₹198 is needed. Such a break can take the contract up towards ₹214.