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The Zinc futures contract on the Multi Commodity Exchange (MCX) has fallen sharply in the past week. It touched a high of ₹217.5 per kg on October 10 and has fallen over 7 per cent to ₹202.
The sharp fall has dragged the contract below the key support level of ₹205. Inability to bounce above ₹205 from current levels will continue to keep the contract under pressure.
The region between ₹205 and ₹206 will be a crucial resistance zone. Though the possibility of testing this resistance cannot be ruled out in the near term, a break above ₹206 is less likely. A pull-back from the ₹205-206 zone can drag the contract to ₹197 or even ₹195 in the short-term.
Traders with a short-term perspective can go short on rallies at ₹204. A stop-loss can be placed at ₹209 for the target of ₹196. Revise the stop-loss to ₹201 as soon as the contract moves down to ₹199.
The downside pressure will ease only if the MCX-Zinc futures contract breaches ₹206 decisively. Such a break can take it higher to ₹210 or even ₹215 thereafter. However, such a strong rally looks unlikely at the moment.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.
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