Lead prices have been trading flat for the past three weeks. The continuous contract of lead on the Multi Commodity Exchange (MCX) has been oscillating between ₹187 and ₹190.
That said, the contract has a strong resistance band between ₹192 and ₹195. If the contract breaks out of ₹195, the outlook will turn bullish, where prices could rally past ₹200-mark to touch ₹210 quickly.
However, as mentioned earlier, the resistance band of ₹192-195 could be too strong for the bulls. Notably, this barrier has been blocking the bulls since September 2021. Therefore, the likelihood of the price falling off these levels is high. In such a case, lead futures could decline to ₹180 – its nearest notable support. Subsequent support is at ₹175.
Trade strategy
Considering the strength of the resistance region of ₹192-195, one can short MCX-Lead futures. That is, short at the current level of ₹189 and add more shorts if the price inches up to ₹192. Place stop-loss at ₹196 at first.
Move the stop-loss down to ₹191 when the price falls below ₹187. Similarly, when the price touches ₹183, tighten the stop-loss further to ₹186. Liquidate the shorts at ₹180.