The October futures contract of lead in the Multi Commodity Exchange (MCX) has been on a decline since the last week of August. The price fell from about ₹158 to the current level of about ₹142 and it is now trading below the 21-day moving average (DMA). Also, the 21-DMA has crossed below the 50-DMA — a bearish indication.
Substantiating the negative bias, the contract has been forming lower lows; the daily relative strength index is on a decline and has slipped below the midpoint level of 50. Moreover, the moving average convergence-divergence indicator in the daily chart is charting a downward trajectory and has moved deeper into the bearish zone. Given the above reasons, the contract will most likely fall further.
The nearest support from the current level is ₹138 with the subsequent support at ₹135. But if the contract reverses from here and rallies, the immediate hurlde it will face can be ₹145. Beyond that level, the contract can rise to ₹148.
Now that the trend is bearish, traders can sell on rallies with stop-loss at ₹148.
Note: The recommendations are based on technical analysis.
There is a risk of loss in trading