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Contrary to our expectation, the lead futures contract on the Multi Commodity Exchange (MCX) has failed to break above the resistance at ₹152 per kg and has come off sharply in the past week. The contract has tumbled over 5 per cent in the past week from ₹149 to make a low of ₹141 on Wednesday.
The contract has bounced back slightly from this low and is currently trading at ₹142 per kg. This sharp fall has dragged the contract well below a key support level of ₹145. Immediate support is in the ₹140-139.80 region. If the contract manages to sustain above this support, a range bound move between ₹140 and ₹145 is possible for some time.
But if the MCX-lead futures contract declines below ₹139.8, the downside pressure can increase. Such a break can pull the contract lower to ₹137 initially. Further break below ₹137 will increase the likelihood of the contract’s downmove extending to ₹133.
The contract will have to break above ₹145 to alter the outlook to positive. Such a break will ease the downside pressure and take the contract higher to ₹151 levels once again. But such a strong rally looks less probable in the near term.
Note: The recommendations are based on technical analysis and there is risk of loss in trading
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