The zinc futures contract on the Multi Commodity Exchange (MCX) failed to sustain above the key support level of ₹175 a kg in the past week. The contract hovered above ₹175 in the initial part of the week and declined sharply breaking below it thereafter. The contract has tumbled 2.8 per cent in the past week and is currently trading at ₹172 per kg.

The strong fall indicates that the downtrend that has been in place since December is intact. A dip to test the next key supports at ₹171 and ₹170 is likely in the near term. A bounce from this ₹171-₹170 support zone can trigger a corrective rally to ₹175 and ₹177 again. But a strong break below ₹170 can take the contract initially lower to ₹168. A further break below ₹168 will then increase the likelihood of the downmove extending to ₹165.

The region between ₹180 and ₹182 is crucial resistance for the MCX-Zinc futures contract. The outlook will turn positive only if the contract manages to breach ₹182 decisively. But such a strong upmove looks unlikely at the moment.

Global trend

The zinc (three-month forward) contract has been in a strong downtrend since December. The contract made a high of $2,643 per tonne in the first week of December and has been consistently falling since then. The downtrend is intact. A fall to test $2,400 is likely in the near term. If the contract manages to bounce from $2,400, a relief rally to $2,470 and $2,500 is possible. But a strong break below $2,400 will increase the downside pressure and will drag the contract lower to $2,350.

The price has been moving down since October. This leaves the possibility high of the LME-Zinc contract breaking below $2,400 and falling to $2,350 in the coming weeks.

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

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