Lead futures on the Multi Commodity Exchange (MCX) has been falling in the recent sessions. The latest leg of downtrend began after the contract faced resistance at ₹186.
Since the October contract expires this week, we are taking the November series for analysis and trade recommendation.
The November expiry lead futures fell off the hurdle at ₹188 in early October. After consolidating for a while in the second and the third week of this month, it slipped below the support at ₹182 last week. This is a bearish signal.
However, from the current level of ₹180, the downside appears limited. The lead futures (November) has a strong support between ₹172 and ₹175. Notably, since July 2021, lead futures has not breached ₹170-mark.
Therefore, the probability of a rebound from the price region of ₹170-175 is high. In such a case, the lead futures can quickly retest ₹188.
On the other hand, if the contract breaches the base ₹170, it can lead to a fresh leg of downtrend. Nearest notable support below ₹170 can be seen at ₹150.
Trade strategy
Buy lead futures (November) if the price dips to ₹172. Place initial stop-loss at ₹167. When the contract rises above ₹182, tighten the stop-loss to ₹178. Book profits at ₹188.