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The zinc futures contract on the Multi Commodity Exchange (MCX) moved sharply higher in the past week. From a low of ₹159.35 per kg last Thursday, it broke above a key resistance level around ₹170 to record a high of ₹172.65 on Tuesday.
The strong rebound has eased the danger of the contract falling to ₹155-150 levels. However, the contract has since declined slightly, and is trading at ₹171. Resistance at ₹173 has halted the contract’s rally at the moment. The region between ₹169 and ₹170 is a key support to watch. If the contract manages to sustain above this support zone, there is a strong likelihood of it breaking above the resistance at ₹173. Such a break will see the rally extending to ₹179 in the coming days.
Short-term traders with a high risk appetite can go long on a decisive break above ₹173, with a stop-loss at ₹170, for the target of ₹179. Revise the stop-loss higher to ₹175 if the contract moves up to ₹177.
On the other hand, if the contract declines below ₹169, it can test ₹167 levels initially.
A further fall below ₹167 will increase the likelihood of the down move extending to ₹163 or even ₹160 once again.
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