Barring the dip to ₹183.95 on Monday last week, lead prices have largely remained stable over the past week. The lead future contract on the Multi Commodity Exchange (MCX) has been oscillating between ₹184.5 and 186.5. It is currently trading at ₹185.5 per kg.
Outlook
Overall, there is no major change in the outlook mentioned in this column last week. Resistance is at ₹187, which is continuing to hold well. We expect the MCX lead contract to remain below this resistance as we see less chance for it to break above it.
Intermediate support is at ₹184.5. As long as the contract trades below ₹187, it is highly likely to break below ₹184.5 and fall to ₹182-180 in one to two weeks. Thereafter a corrective bounce to ₹183-185 can be seen
The view will turn bullish only if the MCX lead futures contract breaks above ₹187 decisively. Such a break will open doors to test ₹193-195 on the upside again.
Trading strategy
Last week we had suggested to go short at ₹185 and ₹186. The average holding value is now ₹185.5. We suggest traders to hold on to this short position. Retain the stop-loss at ₹188 and follow the same strategy. Trail the stop-loss down to ₹185 as soon as the contract falls to ₹183.5. Revise the stop-loss further down to ₹182 when the MCX lead contract declines to ₹181 on the downside. Exit the short positions at ₹180.