Lead futures (January contract) on the Multi Commodity Exchange (MCX), which has been charting a sideways trend for nearly a month, slipped below the support at ₹181 on Wednesday. This has opened the room for further downside in the coming sessions.
The contract closed at ₹180.4 on Wednesday. It is likely to drop to ₹175, its nearest support. The immediate support below ₹175 is at ₹172. Note that ₹178 is a minor support.
But if lead futures recover from the current level, it is likely to face resistance at ₹181 and ₹183. Only a decisive breakout of ₹183 can turn the trend bullish. Until then, the bears will have an upper hand.
Trade strategy
Short lead futures at the current level of ₹180 and add shorts if the price rallies to ₹182. Place stop-loss at ₹184. When the contract falls below ₹178, tighten the stop-loss to ₹180. Book profits at ₹176.