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The Lead futures contract on the Multi Commodity Exchange (MCX) fell in the past week, contrary to an expectation of a rally. The contract made a high of ₹171.6 per kg in the early part of the week and has fallen to a low of ₹166.3 on Tuesday. The contract is currently trading at ₹167 per kg.
A key support is at ₹165.5 - the 21-day moving average. The contract will come under renewed pressure only if it breaks below this support. A break below ₹165.5 will increase the likelihood of the contract falling to ₹160 or ₹159 in the short term.
On the other hand, the bias will remain positive as long as the contract remains above the 21-day moving average support level of ₹165.5. An up-move to ₹174 is possible in such a scenario. Inability to break above ₹174 can trigger a pull-back move to ₹170 or ₹168 again. But a strong break above ₹174 will boost the momentum. Such a break will pave way for the next target of ₹178.
Trading strategy
Traders who have taken long positions at ₹170 and ₹168 can hold it with a revised stop-loss at ₹165. Move the stop-loss higher to ₹172 as soon as the contract moves up to ₹173. Book profits at ₹178.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.
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