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The uptrend in lead, which is in place since May 2020 lost traction in September 2021. As a result, the continuous contract of lead on the Multi Commodity Exchange (MCX), which started its rally from about ₹130 could not extend the upswing beyond ₹195. Although there was no bearish trend reversal, the contract was largely charting a sideways trend. That is, since September last year, it has been oscillating within ₹180 and ₹195.
In the first week of March this year, the contract hit a high of ₹198. But it then declined and is now trading around ₹183. The price band of ₹180-182 has been acting as a strong support band for over six months and the contract has bounced off this support several times in the recent months. Given that the trend has been sideways and the futures is trading just above the support band, one can consider taking fresh long positions. The contract is likely to go back to test the upper end of the range i.e., ₹195.
Therefore, traders can initiate fresh longs at current levels with stop-loss at ₹175. Exit the longs when price hits ₹195. Stick to the stop-loss strictly because a breach of the support at ₹180 can turn the outlook negative. Below ₹180 the contract can decline to ₹173 initially and then possibly to ₹168, which is a strong support level.
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