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Over the past month, the lead futures on the Multi Commodity Exchange (MCX) have seen a decline.
The February futures closed at ₹185 yesterday compared to ₹192 a month ago, losing 3.6 per cent which is considerable given that this metal has been trading with very low volatility for more than a year.
We expect the contract to fall further from here. The nearest support is at ₹180 with the subsequent one at ₹173. On the other hand, the immediate resistance is at ₹188.
Even if there is a rally from the current level of ₹184, it is likely to be capped at ₹188. Above this barrier, the price band of ₹192-195 is a strong resistance.
Overall, the bias remains bearish with the chances of a fall high.
Trade strategy
Traders can go short on lead futures at the current level of ₹184.
Add more shorts if the price rallies to ₹188. Place stop-loss at ₹195.
Tighten the stop-loss to ₹184 when the price slips below ₹180. Liquidate the shorts at ₹175.
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