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The key resistance at ₹168 per kg had been capping the rally in the Lead futures contract on the Multi Commodity Exchange (MCX) over last two weeks.
On Wednesday, the contract reversed from this resistance and fell 1.7 per cent. This fall breached its 21-day moving average. Further, the contract extended its down move on Thursday, by declining 1.6 per cent to trade at ₹161 levels. With this fall, the contract has breached a key support at ₹163 as well as its 50-day moving average decisively. However, the contract now tests a key base at around ₹160 with a negative bias. The daily rate of change indicator features in the negative territory, implying selling interest. Both the daily and weekly relative strength indices hover in the neutral region, with downward bias.
The short-term outlook is bearish for the contract. Traders with a short-term perspective can go short with a stop-loss at ₹165. An emphatic downward break of the immediate support at ₹160 can pull the contract down to ₹157 and ₹155 levels in the short-term.
Conversely, if the contract moves beyond ₹163, it can witness a corrective up move to ₹165 or to ₹167 levels. The contract needs to emphatically break above ₹168 to alter the bearish outlook and take it northwards to ₹170 and ₹173 levels.
Note: These recommendations are based on technical analysis and there is a risk of loss in trading.
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