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Three weeks ago, lead futures on the Multi Commodity Exchange (MCX) faced resistance at ₹193 and reversed the trend downwards. Thus, the resistance band of ₹192-195 held well in blocking the bulls.
Currently trading at around ₹185, the price action hints at more decline. While ₹180 is a minor support, we expect the bears to drag the contract below this level, possibly to ₹173. A breach of this support can turn the medium-term trend bearish where the price could fall to ₹160.
That said, if the contract regains positive momentum and breaks out of ₹195, it can rally past ₹200 to touch ₹210.
Trade strategy
Given that the resistance band of ₹192-195 successfully stopped the bulls and stayed valid since September 2021, the likelihood of a decline is high.
Traders can consider going short on lead futures at the current level of ₹185 and add more shorts if the price goes up to ₹188. Place stop-loss at ₹195 initially. Tighten the stop-loss to ₹184 when price slips below ₹180. Exit the shorts at ₹175.
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