The continuous futures of lead on the MCX (Multi Commodity Exchange) has been rallying since mid-June. It bounced off the support at ₹166 and made a two-month high of ₹186.1 last week. While the current contract is hovering around ₹184, the next month contract i.e., the September expiry is trading at ₹180. Thus, next month's contract is at a discount and this is not good news for the bulls. Since the August contract expires today, traders can consider September futures to initiate positions.

The September lead futures, trading around ₹180, is less likely to rally beyond ₹185 since this is a substantial resistance. Therefore, we expect the contract to fall from here. A decline from the current level can drag the contract below ₹175, wherein it could touch ₹157.

A couple of weeks ago we suggested initiating shorts with average selling prices at ₹180, with a stop-loss at ₹192. Traders who went short can continue to hold, but roll this over to the September contract if you are holding shorts on the August series.

When the contract moves in line with our expectation and falls below ₹166, modify the stop-loss to ₹182. Exit all your shorts at ₹157 because this is a key support against which the contract might witness a rebound.

But it is important to note that if the contract rallies above ₹184, it can turn the trend bullish. A move above ₹184 could also mean that the falling trendline resistance would have been taken out, making a stronger case for the bulls. Above ₹184, the resistances are at ₹195 and ₹200.