Lead futures on the Multi Commodity Exchange (MCX), which consolidated in the resistance band of ₹194-196 for two weeks, has seen prices drop this week. The bears seem to be making use of the barrier to drag the contract lower.

Since the above mentioned resistance has held well since September 2021, bears always had the advantage at these price levels. In a bearish sign, lead futures have now slipped below the 20-day moving average.

We anticipate the contract will decline to ₹180, a support. A breach of this level can result in the contract falling to ₹174. This is a strong support.

On the other hand, if the current price decline is short-lived and the lead futures makes a U-turn to rally past the resistance at ₹196, we could see a quick upswing to ₹208, a potential resistance.

Trade strategy

We suggested going short on lead futures at ₹195, with a stop-loss at ₹198. Hold this trade. But revise the stop-loss lower to ₹194. On a further fall to ₹184, tighten the stop-loss to ₹188. Liquidate the shorts at ₹180.