MCX-lead futures: Go long above ₹180 by admin- Wednesday, July 7th, 2021 07:50:15 AM
The continuous contract of lead on the Multi Commodity Exchange (MCX) has been witnessing considerable volatility since the beginning of 2021. It rallied until the final week of February and hit a high of ₹181.3.
However, the contract reversed the trend and started to head downwards. But it again went up after gaining support of ₹158 in mid-March only to face resistance at ₹181, following which the futures price moderated to ₹170. After fluctuating between ₹170 and ₹174 since the final week of May, the contract breached the resistance at ₹174 last week and is now hovering around ₹180.
Upper hand for bulls
The price action looks bullish and thus, the contract is likely to extend the rally. The bullish inclination in substantiated by the relative strength index, which stays in the bullish territory and the moving average convergence divergence on the daily chart, which is turning its trajectory upwards after remaining in the neutral region for the past three weeks. Also, the average directional index shows that the bulls are having an upper hand over the bears.
However, the contract is currently facing a barrier at ₹180 and the number of outstanding open interest (OI) has almost remained the same along the rally. While this is not a bearish sign, an increase in OI would have made the trend stronger. Hence, traders can wait for now and buy lead futures with stop-loss at ₹176 if only the contract breaches the hurdle at ₹180. Above ₹180, the futures can touch ₹190 in the short-term.