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Lead futures on the Multi Commodity Exchange (MCX) has been in a downtrend over the past few weeks. The June contract faced resistance at ₹196 and began declining.
In the past week, June lead futures fell below the 50-day moving average, as also an important support at ₹190. This has turned the outlook weak for the contract.
From the current level, we anticipate the downswing to extend to ₹184, its nearest support. Subsequent support is at ₹180.
On the other hand, if lead futures reclaim ₹190, it can move up to ₹196. However, only a decisive breakout beyond ₹196 can help the contract establish a fresh leg of rally.
Broadly, the chart indicates that lead futures is set to fall from here and, therefore, traders can opt for short positions.
Trade strategy
Last week, we recommended going short on lead futures once the support at ₹190 is breached. Traders who initiated this position can retain them with a stop-loss at ₹194.
Fresh shorts can also be initiated now as the contract is hovering around ₹190. Exit the shorts when the contract falls to ₹184.
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