Lead has seen almost perpendicular rise in the last 1 month. On 16th August, Lead Sep contract was trading at 103 Rs. It is now trading at 123 Rs, which translates into the rise of 20% within one month. The primary reason behind the same is QE3 anticipation by Fed and ECB announcement of backing Euro currency through unlimited funding support to the troubled countries in Euro region.
But at the current levels, the commodity seems over-bought. It is also confirmed through RSI indicator which is currently at 88 on daily charts (over 80 indicates over-bought). Also the perpendicular rise makes risk-to-reward ratio more attractive.
A normal correction under such cirumstances goes till around 30% of the total gains (Fibonacci Retracement). So with 20 Rs rise, 6 Rs correction can come and hence, we arrive at possible target price levels of 119 and 116 respectively.
Stop-loss can be placed at 126 which stands above 125, the last major resistance level.
Wishing you a happy trading!!
Both targets achieved.
ReplyDelete