Beginning mid-October, the price of lead was appreciating steadily and as a result, the January futures contract of the metal on the Multi Commodity Exchange (MCX) began to rally from about ₹140. Until a a couple of weeks ago, the contract marked a fresh high of ₹164.
However, the contract could not extend further and started to show signs of the uptrend losing strength. The daily relative strength index (RSI) formed a bearish divergence and the moving average convergence divergence (MACD) indicator became flat after tracing an upward trajectory during the preceding two months.
Following this, the contract weakened and breached a key support band of ₹159 and ₹160 and is currently hovering around ₹165. With that, the price has now slipped below the 21-day moving average (DMA), signalling a bearish bias. Moreover, the RSI has entered the negative zero and the MACD is now pointing downwards.
The above factors indicate that the price could drop further from the current levels. While ₹153 can act as an immediate support, the contract can break below this level and decline to ₹148.
Considering these factors, traders can initiate fresh short position with stop-loss at ₹161.
This article is auto-generated by Algorithm Source: www.thehindubusinessline.com
