Lead futures has been on a decline since early October. The upswing in price seen so far this week only seems to be a corrective rally and that the downtrend might resume soon.
The November lead futures on the Multi Commodity Exchange (MCX) rebounded from ₹178 this week. But there is a trendline resistance at ₹181.30. Above this, there is a barrier at ₹182.50.
Most probably, lead futures is likely to restart its move southwards. We expect the contract to retest the support at ₹178. A breach of this can lead to a fall to ₹175.
On the other hand, if the contract breaks out of the trendline and the hurdle at ₹182.50, the trend can turn bullish. In such a scenario, lead futures might rally to ₹185 or even to ₹188.
Nevertheless, as it stands, the possibility of a fall looks likely as the trend has been bearish recently and that lead futures is now hovering near a resistance.
Trade strategy
Short lead futures (November) ₹181 and place a stop-loss at ₹182.50. When the contract declines to ₹179, revise the stop-loss to ₹180.50. Book profits at ₹178.
Note that on Wednesday, only the evening session (between 5 pm and 11:55 pm) will be open for trading in view of the Maharashtra Assembly election.