The lead futures on the Multi Commodity Exchange (MCX) saw its price drop in the past two months. After facing resistance at ₹192 in mid-January, the contract started to decline gradually. Nevertheless, after reaching the support at ₹180 a month back, the decline halted and started moving sideways in the recent weeks.
The support at ₹180 is strong and we expect the contract to bounce off from this level. Although there is a minor resistance at ₹186, we anticipate lead futures to surpass this to touch ₹192 in the short-term.
If the contract slips below the support at ₹180, the outlook will change bearish. In such a case, we might see the price swiftly falling to ₹170 – a major support.
Nevertheless, as long as the contract stays above ₹180, traders can take a bullish bias. Also, the risk-reward ratio is favourable for long positions at this juncture.
Trade strategy
Buy lead futures at ₹183 and add more longs if the price dips to ₹181. Place the stop-loss at ₹178 at first. Revise this up to ₹183 when the contract rallies above ₹186.
Further, tighten the stop-loss to ₹186 when the price goes above ₹188. Book profits at ₹192.