Over the past week, the lead future contract on the MCX has been held within the price band of ₹180-185.
However, it has been showing positive bias after breaking out of the resistance at ₹184 a couple of weeks back.
Although the price has now softened to ₹183, the bias remains bullish. Notably, the price remains above 20- and 50-day moving averages.
We expect the contract to regain positive momentum and resume the rally from here. On the upside, it has the potential to advance towards the resistance band of ₹192-195.
On the other hand, a breach of the support at ₹180 i.e., the lower boundary of the range within which lead futures have been trading of late, the short-term trend could turn bearish. In this case, we might see a decline to ₹177, the nearest support. Subsequent support is at ₹170.
A week back, we recommended initiating fresh longs at ₹182 and ₹180. But the price did not fall to ₹180 and thus, the buy at this price would not have been triggered.
So, as it stands, if traders had followed our suggestion, there would be a long initiated at ₹182 with a stop-loss at ₹177. Continue to hold this position.
In case there is a decline to ₹180, one can consider adding more longs. Thereafter, when the contract rallies past ₹188, tighten the stop-loss from ₹177 to ₹186. Book profits at ₹192.