The April futures contract of Lead Mini on the MCX was gradually moving up since the beginning of the month. But it faced a hurdle at ₹136, which coincides with the 50 per cent Fibonacci retracement level of the previous downswing.

Unable to rally past that level, the contract was consolidating around ₹136 for the past few trading sessions. On Tuesday, the price fell on the back of the resistance and closed the session at ₹131.7, just above the key support of ₹129. The year-to-date loss stands at about 14 per cent.

The price has fallen below the 21-DMA and the daily RSI is showing a fresh downtick. On the other hand, the MACD indicator on the daily chart has started to show signs of bulls losing strength. So, a break below the support of ₹129 can trigger fresh round of selling.

On the back of fresh bearish momentum, if the contract breaches the support at ₹129, it might find support at ₹125. A break below that level can drag the contract to ₹117.3 — its previous low. On the contrary, if the contract takes support at ₹129 and rise, it will face a substantial hurdle at ₹136. A breakout of that level can lift the price to ₹140, where 61.8 per cent Fibonacci retracement level and the 50-day moving average coincides.

On the global front, the three-month rolling forward contract of lead on the LME, which was trading above the important level of $1,700, slipped below it last week. Since the overall trend is bearish, the contract will most likely moderate from current levels, which could also weigh on the MCX contract.

Trading strategy

The overall trend of the metal on the LME and MCX is bearish. But the MCX-Lead has a support at ₹129. Hence, traders can initiate fresh short positions with stop-loss at ₹135, if it breaches the support at ₹129.

Note: The recommendations are based on technical analysis. There is a risk of loss in trading.