The Lead futures contract on the Multi Commodity Exchange (MCX) is attempting to bounce back after testing the lower end of its range. The MCX Lead contract has been trading in a broad range of ₹179-₹198 per kg for a prolonged period of time since October last year. It fell to a low of ₹178.75 last week and has bounced from there. It is currently trading at ₹182.35.
On May 4, we had recommended to go long at ₹182.5 and accumulate at ₹180. Retain the stop-loss at ₹177. Resistance is in the ₹184-₹185 region. Traders holding this long position should watch this resistance carefully. If the contract fails to break above ₹185 and reverses lower, exit the longs. If the contract manages to break above ₹185, the overall sideways range will remain intact. That break can trigger a rise to ₹190-₹195, which can be seen in the coming weeks. In that case, trail the stop-loss up to ₹184 as soon as the contract rises to ₹187. Move the stop-loss further up to ₹189 as soon as the contract touches ₹193 on the upside. Book profits at ₹196.
On the other hand, if the contract reverses lower from ₹185, the danger of falling below ₹179 will increase. A decisive break below ₹179 will drag the contract lower to ₹172-₹170. As mentioned above, traders can exit the longs if the contract reverses lower from ₹184-₹185. Then wait for a break below ₹179 and take fresh short positions. Keep the stop-loss at ₹183 and exit at ₹171.