Lead futures on the Multi Commodity Exchange (MCX) have charted a sideways trend since April this year, with the continuous contract oscillating in a band of ₹182 and ₹185. On Wednesday, it declined to close below the support at ₹182, opening the door for a further fall.
While ₹180 is a potential support, we expect the contract to drop below this level and touch ₹175, a support in the near-term. Subsequent support is at ₹173.
On the other hand, if the contract starts recovering, it could rally towards the ₹184-185 price band. The 50-day moving average lies at ₹184.
Nevertheless, as it stands, the probability of a decline is high and, therefore, traders can consider taking fresh short positions.
Go short on MCX lead futures at the current level of ₹181. Add more shorts if the price rises to ₹182.50. Place the initial stop-loss at ₹183.50.
When the contract touches ₹178, tighten the stop-loss to ₹180. Book profits at ₹176.