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It has been a volatile week for the Lead futures contract on the Multi Commodity Exchange (MCX). The contract fell to a low of ₹150.65 a kg on Monday and reversed sharply higher from there. However, the bounce back move was short-lived and the contract has come-off again after spiking to a high of ₹158.95 on Wednesday. The contract is currently trading at ₹155 per kg.
Bearish outlook
As expected the resistance in the ₹157-₹160 region has held very well and halted the bounce back move. This leaves the broader bearish outlook remain intact. The contract can fall to test the ₹152-₹150 support zone again. A strong break and a decisive close below ₹150 will increase the likelihood of the fall extending to ₹145 in the coming days.
The 200-day moving average is poised at ₹156, which is a key immediate resistance. A strong break above it can ease the downside pressure and take the contract higher to ₹160 again. The region between ₹160 and ₹162 is a crucial resistance zone for the MCX-Lead futures contract. The outlook will turn positive only if the contract breaches ₹162 decisively. However, such a strong break looks less likely at the moment.
Trade strategy
Traders who have taken short positions on rallies last week at ₹157 can hold it. Retain the stop-loss at ₹162 for the target of ₹148. Revise the stop-loss lower to ₹155 as soon as the contract moves down to ₹151.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.
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