The Zinc futures contract on the Multi Commodity Exchange (MCX) has reversed sharply higher in the past week. The contract made a low of ₹157 per kg on June 13 and has surged over 6 per cent from there. It is currently trading at ₹167 per kg. This upward reversal move is significant as it has happened from a key trend-line support level of ₹156.

Immediate support is in the ₹164-₹163.5 region, which can limit the downside in the near term. A rise to ₹170 or even ₹173 looks likely in the coming days. Short-term traders with a high risk appetite can go long at current levels. Stop-loss can be placed at ₹163 for the target of ₹173. Revise the stop-loss higher to ₹168.5 as soon as the contract moves up to ₹170.

Key resistance is the ₹173-₹174 zone where both the 200-day moving average as well as a trend-line are poised. Whether the contract manages to surpass this hurdle or not will be deciding the next trend. A strong break and a decisive close above ₹174 will ease the downside pressure. It will also give an initial signal that the downtrend which has been in place since February, is getting reversed. Such a break can take it to ₹179 initially. Further break above ₹179 will pave way for a fresh rally to ₹185.

On the other hand, if the contract reverses lower from the ₹173-₹174 resistance zone, it can fall to ₹166 and ₹165 levels once again. In such a scenario, the possibility is high of the contract remaining range bound between ₹156 and ₹174 for some time.

Note: The recommendations are based on technical analysis and there is a risk of loss in trading

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