Lead futures (February contract) on the Multi Commodity Exchange (MCX) have been on a decline since the beginning of this year. However, after reaching ₹175 a couple of weeks back, the contract rebounded.
Although there has not been confirmations of a bullish trend reversal, the current price action indicates a potential upside to ₹182, which could be a corrective rally. For lead futures to turn the trend bullish, they should break out of ₹184. If ₹184 is breached, lead futures could extend the rally to ₹190.
However, if the contract falls from the current level and breaks below ₹175, it will open the door for another leg of downtrend. Support below ₹175 can be spotted at ₹166.
Trading strategy
As there is a good chance for lead futures to see a rally from here, one can buy at the current level of ₹178. Add longs in case the price dips to ₹176.50. Place the initial stop-loss at ₹174.80.
When the contract touches ₹180, tighten the stop-loss to ₹178. Book profits at ₹182.