The sharp fall in the zinc futures contract on the Multi Commodity Exchange (MCX) that has been in place since late October halted last week. The contract had tumbled over 10 per cent from its October high of ₹202.95 per kg to a low of ₹180.7 last week. However, it has bounced from this low and is currently trading at ₹187.5 per kg.

The bounce is technically very significant. This upward reversal has happened from near the 61.8 per cent Fibonacci retracement support level of ₹180.45. As such the price action in the coming days will need a close watch. Whether the contract manages to sustain this bounce-back move or not will determine the next move.

Traders can stay out of the market until a clear trend and a trade signal emerges.

If the contract fails to gain momentum in the coming sessions and reverses lower again, it may come under renewed pressure. In such a scenario, the contract can break below the Fibonacci retracement support level of ₹180.45 and fall to ₹178 or ₹176.

On the other hand, if the MCX-Zinc futures contract manages to trade above ₹184 in the coming days, an upmove to ₹195 or even ₹198 is possible in the near term. The broad region between ₹195 and ₹200 is a crucial resistance for the contract. The upside could be capped to this resistance zone in the near term. The outlook will turn positive only if the MCX-Zinc futures contract manages to breach ₹200 decisively.

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

Related Topics
comment COMMENT NOW