The bounce back move in the Lead futures contract on the Multi Commodity Exchange (MCX) has lost momentum this week. After recording a high of ₹147 per kg on Monday and the contract reversed sharply lower from there. The contract has tumbled 5 per cent from this high and is trading at around ₹139.5 per kg.

Technically the downward reversal early this week has happened from just below a key trend-line resistance level of ₹148. This keeps the downtrend that has been in place since February intact. It also leaves the near-term view bearish for the MCX-Lead futures contract. Resistance is in the band between ₹142.5 and ₹144. The upside in the near-term is expected to be capped to these levels as any intermediate bounces may find fresh sellers coming into the market in the ₹142.5-₹144 region.

A fall to ₹136 and ₹135.5 looks likely in the coming days. The level of ₹135.5 is a crucial trend-line support for the contract. Whether the contract reverses higher from this level or not will decide the next leg of move.

If the contract manages to bounce from ₹135.5, it can rise to ₹140 and ₹145 levels once again. In such a scenario, a range bounce move between ₹135.5 and ₹147 is possible for some time. But if the contract breaks below ₹135.5 decisively, the possibility of the contract tumbling to ₹130 thereafter will increase.

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

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