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The Zinc futures contract on the Multi Commodity Exchange fell as expected in the past week, initially. However, it has managed to reverse higher after a low of ₹190.7 per kg on Thursday.
The contract has surged about 5 per cent from this low and is currently trading at ₹200/kg. Immediate resistance is at ₹202. A strong break above it can take the contract higher to ₹205 and ₹206 again.
The upward reversal in the past week has happened from a key short-term trendline support level around ₹190. This keeps the uptrend intact. It also increases the possibility of the contract breaking above the key ₹205-206 resistance zone in the coming days. Such a break can boost the momentum. It will increase the likelihood of the contract rallying to ₹210 or even ₹215 thereafter.
Short-term traders with a big risk appetite can make use of dips to go long at ₹197. A stop-loss can be placed at ₹193 for the target of ₹204. Revise the stop-loss higher to ₹199 as soon as the contract moves up to ₹201.
On the other hand, if the MCX Zinc futures contract fails to break above ₹206 in the coming days, a pull-back to ₹195 may be seen again.
In such a scenario, a range-bound move between ₹195 and ₹206 is possible for some time.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.
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