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After trading in narrow range at around ₹170 per kg for much of the past week, the zinc futures contract on the Multi Commodity Exchange (MCX) tumbled about 2 per cent on Wednesday. It is now trading near ₹166 per kg.
The reversal from the high of ₹172.65 on May 23 suggests that the sideways movement between ₹160 and ₹173 is intact. The contract is headed for the lower end of the range, and there is a likelihood of its falling to ₹160 this week. Whether or not it reverses higher from ₹160 will decide the next move. A strong bounce will keep the range-bound move intact and increase the chances of the contract moving to ₹170 and ₹173.
Short-term traders with high risk appetite can go long if the contract reverses higher from ₹160. Stop-loss can be placed at ₹156 for a target of ₹170, and revised to ₹162 if the contract moves to ₹165.
But if the contract breaks below ₹160, downside pressure can drag it to ₹155. A further break will extend the down move to ₹150 or ₹148.
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