Commodity Calls

MCX Zinc hovers above a crucial support

Gurumurthy K Updated on December 25, 2018

The zinc futures contract on the Multi Commodity Exchange of India (MCX) fell in the past week as expected. The contract has tumbled over 4 per cent from around ₹185 per kg to the current levels of ₹177. The contract has lost seven per cent in the past two weeks.

A crucial support is near current levels at ₹175 which is likely to be tested in the coming sessions. Whether the contract manages to reverse higher from this support or not will decide the direction of the next move. Traders can stay out of the market until a clear trend emerges.

If the contract manages to bounce from ₹175, an upmove to ₹181 and ₹184 is possible. Inability to breach ₹184 can drag the contract lower to ₹177 and ₹175 again. In such a scenario, a range-bound move between ₹175 and ₹184 can be seen for some time. But if the contract breaks above ₹184 decisively, the downside pressure would ease. Such a break will then increase the likelihood of the upmove extending towards ₹193 over the short-term.

On the other hand, if the contract breaks below ₹175 in the coming days, the downside pressure will increase. The contract can then target ₹172. A further break below ₹172 will then increase the possibility of the contract tumbling towards ₹167 and ₹165.

The region between ₹167 and ₹165 is a strong long-term support for the contract. A key trend-line as well as the 200-week moving averages are poised in this zone which may have the potential to halt the current downtrend.

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

Read the rest of this article by Signing up for Portfolio.It's completely free!

What You'll Get





This article is closed for comments.
Please Email the Editor