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Lead futures (December contract) on the Multi Commodity Exchange (MCX) began declining three weeks ago after facing resistance between ₹193 and ₹194. On Wednesday, it closed at ₹182.60.
As it stands, there are no signs of a bullish reversal and it is highly likely to extend the downtrend to ₹180. This is a strong support and we can expect some profit booking when lead futures falls to the ₹181-180 range.
So there is a potential for lead futures to see a rebound between ₹180 and ₹181. In such a case, the contract can rally to ₹186, a hurdle. A breach of this level can lift the contract to ₹188, a resistance.
At this juncture, traders are recommended to stay out as the risk-reward ratio is not favourable for fresh shorts. Also, it can be a bit early to consider longs.
Trade strategy
Buy lead futures (December contract) when the price declines to ₹181. Place stop-loss at ₹179. When the contract rallies to ₹184, tighten the stop-loss to ₹182. Book profits at ₹186.
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