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The downtrend in the lead futures contract on the MCX is intact. The contract has been falling continuously over the last three weeks.
It tumbled about 5 per cent in the past week, which dragged the contract well below a key support level of ₹135 a kg. It is currently trading near ₹133.25. The near-term view is bearish. However, a crucial support is at ₹130, which can be tested in the coming days.
A trend-line as well as a Fibonacci retracement support is poised at this level. What happens after testing this key support level of ₹130 will be crucial in deciding the next leg of move.
If the contract manages to reverse higher from ₹130, the downside pressure can ease.
A rise to ₹135 is possible in such a scenario. If the contract manages to breach above ₹135 decisively, the bounce back move can extend to ₹138-140 or even higher levels thereafter.
Short-term traders with high risk appetite can go long if the contract reverses higher from ₹130.
Keep the stop-loss at ₹128 for the target of ₹134. Revise the stop-loss to ₹132 as soon as the contract moves up to ₹133.5.
On the other hand, if the MCX-Lead futures contract declines below ₹130, the downside pressure may increase.
Such a break will increase the likelihood of the contract falling to ₹126 or ₹124 thereafter.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading
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