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The continuous contract of lead on the Multi Commodity Exchange (MCX) has witnessed considerable volatility since the beginning of the year. It rallied until the final week of February to hit a high of ₹181.3. Then, the contract reversed the trend and declined. It was arrested at the support of ₹158. It gained again after taking this support but facedresistance at ₹181. Following this, the futures moderated to ₹170. This acted as a good base and the contract hovered around this region for quite some time. In the final week of June, the contract rallied and for the third time since the beginning of 2021, the price level of ₹181 acted as a roadblock. This has become a critical level and unless this level is breached, rallies can be weak and can be utilised to sell.
While the contract consolidated around ₹180 level on Monday, it slipped below the consolidation range bottom of ₹177 with significant volume. This has turned the outlook bearish for the contract. The relative strength index is showing a fresh downtick. The moving average convergence divergence indicator on the daily chart has turned downwards. The price is now below the 21-day moving average.
Considering the above factors, traders can short the contract with stop-loss at ₹179. Initially, the contract can be expected to drop to ₹170. A breach of this level can drag the contract to ₹165.
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