Zinc futures contract on the Multi Commodity Exchange (MCX) had tested the key resistance level at ₹205 in the past week as expected. The contract made a high of ₹204.15 per kg on October 9 and has come-off sharply from there. The contract tumbled about 5 per cent from the high and is currently trading at ₹194 per kg.

The near-term view is negative. A dip to test the ₹189-₹188 support region is likely in the near term. If the contract manages to bounce from this support zone, an upmove to ₹200 and ₹202 is likely in the short term. A strong break and a decisive close above ₹205 is needed for the contract to gain fresh momentum. Such a break will then increase the likelihood of the contract rallying to ₹210 or even ₹215.

On the other hand, if the MCX-Zinc futures contract declines below ₹188, it will come under renewed pressure. In such a scenario, there is a strong likelihood of the contract falling to ₹180 in the short term.

However, the indicators on the chart leave the bias positive. The 21-day moving average is on the verge of crossing over the 100-day moving average. This is a positive signal indicating that the downside could be limited. As such the possibility is high of the contract reversing higher from the support level of ₹188 in the coming days.

Trading strategy

Short-term traders with a high risk appetite can go long if the contract reverses higher from ₹188. Stop-loss can be placed at ₹183 for the target of ₹200. Revise the stop-loss higher to ₹191 as soon as the contract moves up to ₹195.

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

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