MCX Lead likely to test crucial support

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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