Near-term view is negative for MCX-Zinc
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