Lead futures on the Multi Commodity Exchange (MCX) is on an uptrend since early April as it found support at ₹180. On Wednesday, it closed at ₹193.50.

While there are no signs on the chart of a bearish reversal now, participants should take note that lead futures is approaching a strong supply zone.

The chart of the continuous contract of lead futures shows that it has fallen off the ₹194-196 price region several times since September 2021. So, this puts the bears at an advantage at the current price levels.

Should lead futures witness a reversal from here, which is highly probable, it can retrace back to the support at ₹180. Below this, ₹174 is a key base against which the contract can see a recovery.

If lead futures decisively breach the barrier at ₹196, it can establish a fresh leg of uptrend, which can take it to ₹208. But as it stands, the possibility of this is low and moreover, the risk-reward ratio is favourable to bears at the moment.

Trade strategy

Short lead futures at ₹194. Place initial stop-loss at ₹198. When the price declines below ₹188, trail the stop-loss to ₹194. On a further fall to ₹184, tighten the stop-loss to ₹188. Liquidate the longs at ₹180.

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