Lead futures on the Multi Commodity Exchange (MCX) has been on a downtrend over the last three weeks. A couple of weeks back, the contract slipped below support at ₹190; the price also fell below the 50-day moving average.
As the contract has sustained below ₹190, the probability for a decline from the current level is high. The nearest support is at ₹184, with the subsequent one at ₹180. Only a clear breakout of ₹190 can turn the bias bullish.
In case lead futures recovers and moves above ₹190, it can stretch the upswing to ₹196, a stiff barrier. While a rally past this level is unlikely, at least in the short-term, a breach of ₹196 can lead to a fresh leg of upswing, possibly lifting the contract to ₹210.
Trade strategy
We recommended going short on lead futures last week. Traders who initiated this trade can retain them with a stop-loss at ₹194. Book profits when the contract falls to ₹184.