Lead futures on the Multi Commodity Exchange (MCX) rallied 2.2 last week. On Monday, after witnessing a volatile session, the November and December series contracts closed at ₹190.8 and ₹192.35, respectively. Since the November series is nearing expiry, we can consider the December series for analysis.
The December lead futures contract has a resistance between ₹193 and ₹194. The upswing hit this region and the bulls could not lift the contract any further. The barrier appears strong and a decline is highly likely.
The nearest support is at ₹188.50, where the 20-day moving average coincides. Subsequent support is at ₹186. We expect lead futures to decline from the current level of ₹192 and touch ₹188.50 in the near term.
But beware that a breakout from ₹194 can trigger a rally, possibly toward the price band of ₹198-200. Nevertheless, the probability for such a rally is low now.
Trade strategy
Short lead futures (December contract) at ₹192 and add shorts if the price rises to ₹193. Place stop-loss at ₹195 at first.
When the contract slips below ₹190, tighten the stop-loss to ₹192. Book profits at ₹188.50.