Lead futures (November contract) on the Multi Commodity Exchange (MCX) encountered a strong barrier at ₹192 in early September. It fell off this level.
But as the calendar turned to October, the bears lost momentum. The bulls did not gather strength to turn the tide in their favour as well. So, since early October, there has been a tug of war between the bulls and the bears effectively leaving the price movement horizontal.
Lead futures has largely been oscillating between ₹185 and ₹187 since the beginning of October. Over the last week, the contract rallied by rebounding from the range bottom of ₹185. Currently trading near 187, lead futures is hovering around the range top.
At this juncture, the probability of a fall looks high. In the near-term, we expect the contract to retest ₹185. On the other hand, if lead futures break out of ₹187, it can establish a rally towards ₹192.
Short lead futures now at around ₹187. We recommend placing target and stop-loss at ₹185 and ₹188, respectively.