Short-term view is negative for MCX-Lead

The Lead futures contract on the Multi Commodity Exchange (MCX) has broken the ₹142-₹152 per kg sideways range below ₹142 last week as expected. The contract which was hovering around ₹152 – the upper end of the range in the initial part of the week, fell sharply thereafter breaking below ₹142. The contract has tumbled over 7 per cent from the week’s high of ₹151.75 and is currently trading at ₹140 per kg.

The outlook is bearish. The ₹142-₹143 range and then the level of ₹145 will now serve as a strong resistance for the contract. Intermediate bounce to these resistance levels is likely to find fresh sellers coming into the market.

A fall to ₹136 or ₹135 is likely in the coming days. If the contract manages to bounce from the ₹136-₹135 support region, a relief rally to ₹140 or ₹142 can be seen. But if the MCX-Lead futures contract breaks below ₹135, the down-move can then extend to ₹132 or even ₹130.

The downside pressure will ease only if the contract manages to rise past ₹145 decisively. Such a break can take the contract higher to the ₹150-₹152 resistance region again. However, the outlook will turn positive only if the contract makes a decisive break above ₹152. But such a strong up-move looks unlikely at the moment.

Trading strategy

Traders with a high-risk appetite can go short at current levels and on rallies at ₹142. Stop-loss can be placed at ₹144 for the target of ₹132. Revise the stop-loss lower to ₹138 as soon as the contract moves down to ₹135.

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

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