The Lead futures contract on the Multi Commodity Exchange fell in the past week as expected. The contract has declined decisively below the key 21-day moving average support level of ₹139 per kg. It is currently trading at ₹137 per kg.

The near-term bias is negative. A crucial support is in the ₹132.5-133 region which is likely to be tested in the coming days. Whether the contract breaks below ₹132.5 or not will be key in deciding the direction of next move.

If the MCX-Lead futures contract manages to bounce from the ₹132.5-133 support zone, the downside pressure would ease. In such a scenario, a relief rally initially to ₹138 is possible. A further break above ₹138 will then increase the likelihood of the upmove extending towards ₹143 thereafter.

On the other hand, if the MCX-Lead futures contract breaks below ₹132.5, the downside pressure will increase. Such a break can take the contract initially lower to ₹130. A further break below ₹130, will then increase the possibility of the contract tumbling towards ₹125 or even ₹122 over the medium term.

Traders can stay out of the contract until a clear trade signal emerges.

Global trend

The Lead (three-month forward) contract on the London Metal Exchange is continuing to trade in a sideways range. The contract has been stuck in between $1,900 and $2,020 per tonne over the past few weeks. Within this range, the contract fell to a low of $1,922 and has bounced from there. It is currently trading at $1,964 per tonne.

The LME-Lead contract is likely to retain its sideways move for some more time. An upmove to test $2,000 and $2,020 — the upper end of the range is likely in the near term. A breakout on either side of $1,900 or $2,020 will determine the direction of the next move.

(Note: The recommendations are based on technical analysis and there is a risk of loss in trading)