Commodity Calls

Near-term view is negative for MCX-Zinc

Gurumurthy K bL Research Bureau | Updated on September 11, 2018 Published on September 11, 2018

The zinc futures contract on the Multi Commodity Exchange (MCX) remained subdued over the past week. The contract moved up initially and hit a high of ₹178.85 per kg on Thursday but it failed to sustain higher. It currently trades at ₹172 per kg.

The near-term outlook is negative. Strong resistance is in the ₹175-₹178 region which is likely to restrict the upside in the near term. Intermediate bounce to this resistance is likely to see fresh sellers. A fall to ₹169.5 is likely in the coming days. A bounce from ₹169.5 can take the contract higher to ₹173 and ₹175 again. In such a scenario, the contract may remain rangebound between ₹169.5 and ₹175 for some time. On the other hand, if the contract breaks below ₹169.5 decisively, the selling pressure will intensify. Such a break will then increase the likelihood of the contract tumbling to ₹165 or even ₹160 over the short term.

The bearish outlook will get negated only if the contract manages to rise past ₹178 decisively. Such a break will ease the downside pressure and will pave way for a fresh rally to ₹183 and ₹185. But such a strong rally looks less probable at the moment as the indicators on the charts are negative. The 21-week moving average is on the verge of crossing below the 100-week moving average. This is a negative signal indicating that the upside in the contract could be limited. As such, the possibility is high of the contract to remain below ₹178 and extend its downmove in the coming days.

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

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