Lead futures (continuous contract) on the Multi Commodity Exchange (MCX) has been moving in a tight range of ₹181-183 over the past month. But on Monday, it closed above the upper band of the range at ₹183, giving it a positive bias. However, there was no follow through rally and the contract has now softened to ₹183 after marking a high of ₹184 on Monday.
There is a potential for lead futures to touch ₹187 in the near-term. However, we expect the contract to see a price correction, possibly to ₹181-182 range, before scaling more heights.
On the other hand, a breach of the support at ₹181 can turn the trend bearish. In this case, lead futures might fall to ₹175. Nevertheless, this looks less likely given the prevailing price action.
Trade strategy
At the current level, the risk-reward is not favourable for long positions. Therefore, one can stay on the fence for now. For fresh positions consider August contract as the July series is nearing expiry.
Buy lead futures if the falls to ₹182. Place initial stop-loss at ₹180. When the contract touches ₹185, tighten the stop-loss to ₹183. Book profits at ₹187.