Lead futures on the Multi Commodity Exchange (MCX) rallied sharply between the first week of April and first week of May. But then, the rally lost traction and the contract started to consolidate.
The June lead futures, unable to surpass ₹196, has been largely charting between ₹190 and ₹196. So, technically, the next leg of trend depends on the direction of the break of the ₹190-196 range. Note that the 50-day moving average coincides at ₹190, making it a strong support.
If lead futures, which is currently testing the support at ₹190, slips below the support at ₹190, can see a fall to ₹184. A breach of this can drag the contract to ₹178.
On the other hand, if lead futures break out of ₹196, it can establish another rally, which can take the contract to ₹208, a possible resistance.
Broadly, the bias is turning bearish, and a prolonged consolidation can increase the probability of a decline.
Trading strategy
Stay out as lead futures is now trading near a support. Go short if the contract slips below ₹190. Target and stop-loss can be at ₹184 and ₹194 respectively.