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The Lead futures contract on the Multi Commodity Exchange (MCX) has been very volatile in the past week. The contract made a high of ₹171.8 a kg and reversed sharply lower from there to make a low of ₹158.1 on Monday. However, the contract has managed to bounce-back from this low and is currently trading at ₹165 per kg. The near-term outlook is unclear for the MCX-Lead futures contract. So, traders can stay out of the market until a clear trend and a trade signal emerges.
A key near-term resistance is at ₹168. Whether the contract breaks above this hurdle or not will give a cue on the next trend. A strong break above ₹168 will ease the downside pressure. It will also bring back the bullish momentum and will increase the likelihood of the contract rallying to ₹174 in the short term.
On the other hand, if the contract remains below ₹168, it can continue to trade under pressure. In such a scenario, the possibility of the contract falling to ₹160 or ₹158 cannot be ruled out. The region between ₹159 and ₹158 is a significant support which is likely to limit the downside. A break below ₹158 looks unlikely at the moment.
Trading strategy
Short-term traders with high risk appetite can go long on a break above ₹168. Stop-loss can be placed at ₹165 for the target of ₹174. Revise the stop-loss higher to ₹170 as soon as the contract moves up to ₹171.5.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.
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