The lead futures on the MCX has been facing downward pressure over the past two weeks and the continuous futures contract is currently hovering in the zone that is a confluence of support i.e., the price area between ₹179 and ₹182. Considering this and that the trend has been up since March, the likelihood of a bounce from here is high.
The contract has been trading with a positive bias since the beginning of the year. While ₹182 was resisting the bulls from making progress beyond that level, the contract has been forming higher lows and eventually forming an ascending triangle pattern. It invalidated the resistance of ₹182 in early September, opening the door for further rally.
Nevertheless, after making a high of ₹195, the contract has corrected and is now testing the support band between ₹179 and ₹182. A rising trendline also coincides at this price band, making the support stronger.
Yet, traders should wait for some bullish momentum being built up before initiating fresh longs. That is, traders can buy lead futures (October) on the MCX if the price rallies past ₹183. Stop-loss can be placed at ₹178.
Resumption of rally from here can take the contract to ₹187, a resistance level. A breakout of this level can result in the contract retesting prior high at ₹195.
But beware that a clear break below ₹179 can result in a quick price drop and so, for long positions, stick to the above-mentioned stop-loss strictly. Notable supports below ₹179 are at ₹175 and ₹168.