Lead futures has been falling steadily since early December, after facing resistance at ₹184. This was the latest leg of decline. The continuous contract has been on the downtrend since May 2024. The resistance band of ₹194-196 triggered the sell-off.

That said, the January futures saw a minor bounce in price after finding support at ₹176. Note that the price band of ₹173.50-176 is a considerable support band as the long-term chart shows that lead futures has been trading within the ₹173.50-196 band since June 2021.

Since the contract is now trading near the lower boundary of this range, the probability of a rally is high. There could be a gradual rally towards the range top of ₹196 in the coming weeks. This provides traders a chance to initiate positional long positions at the current level.

Trade strategy

A couple of weeks back we had suggested a long position at ₹176, with a stop-loss at ₹172. Retain this trade. When the contract reaches ₹185, revise the stop-loss to ₹180. Book profits at ₹194.