The zinc futures contract on the Multi Commodity Exchange (MCX) has surged in the past week breaking above the key resistances at ₹175 per kg and ₹180 per kg. The contract hit a high of ₹186.8 on Monday and currently trades at ₹183 per kg.

The contract has been surging higher consistently since September 17. The strong rally over this period has boosted the momentum. It also signals the end of the downtrend that has been in place since February.

The short-term outlook is bullish. An up-move to ₹190 or ₹193 is likely in the coming days. Inability to breach ₹193 can trigger a pull-back move to ₹185 or ₹180. But the downside is expected to be limited. An eventual break above ₹193 will then increase the likelihood of the contract extending its rally to ₹200 or ₹203 over the medium term.

The region between ₹175 and ₹174 is a key support for the MCX-Zinc futures contract. The outlook will turn negative only if the contract declines below ₹174 decisively. The ensuing targets are ₹170 and ₹165. However, such a sharp fall breaking below ₹174 looks less probable at the moment.

Trading strategy

Traders with a medium-term perspective can go long at current levels and also accumulate on dips at ₹180 and ₹177. Stop-loss can be placed at ₹172 for the target of ₹203. Revise the stop-loss higher to ₹187 as soon as the contract moves up to ₹192.

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

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