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Since May 2020, the continuous futures contract of lead on the Multi Commodity Exchange (MCX) has been moving on the upside.
That is, after seeing a downtrend in the preceding months, the contract reversed the trend after taking support at about ₹128. Thus, the one-year return is about 30 per cent.
Although the trend has been positive and the metal price has appreciated considerably, it has been facing some hindrance at ₹181 since the beginning of 2021. While the futures price went up till mid-February, it started to fall i.e., between the final week of February and mid-March, the contract tumbled by nearly 13 per cent and dropped to around ₹158. By then, the contract had given up almost all the gains it had made in 2021. But since ₹158 being a support, the contract started to build-up positive momentum after a brief period of consolidation.
Even though the contract rallied in April, it was not able to crack the hurdle at ₹181.
That is, a month ago, the contract marked a high of ₹181.9 and started to move south.
The contract has been on a descent for the past three weeks and is currently trading around ₹170.
The daily chart shows a bearish inclination as the contract has dropped below the support band of ₹172 and ₹170, thereby turning the outlook negative.
Traders can sell MCX lead June futures with stop-loss at ₹175. Potential near-term targets can be ₹165 and ₹160.
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