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The downtrend in the Lead futures contract on the Multi Commodity Exchange (MCX) that has been in place since this February is intact. Within this range, the contract has been consolidating in a sideways range between ₹132 and ₹137 a kg for more than a week. The bias is bearish within this range for the contract to break below ₹132 in the coming days. The next target on such a break is ₹130. If the contract manages to reverse higher from ₹130, a relief rally to ₹135 or ₹136 is possible. But a break below ₹130 will increase the likelihood of the downtrend extending to ₹127 thereafter.
However, the presence of a trend-line as well as the 21-month moving average at around ₹130 makes this level a strong support. Also, since the contract has been on a continuous fall since this February, the possibility is high for the current down move can halt at around ₹130. As such there is a strong likelihood of an upward reversal from ₹130 in the coming days which can ease the downside pressure and take the MCX-Lead futures contract higher to ₹135 or ₹136 levels.
Short-term traders can wait for dips and go long if the contract reverses higher from ₹130. Stop-loss can be placed at ₹127.5 for the target of ₹135. Revise the stop-loss higher to ₹132 as soon as the contract moves higher to ₹133.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading
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