The zinc futures contract on the Multi Commodity Exchange of India (MCX) is under pressure. The contract made a high of ₹191.9 per kg and has reversed sharply lower from there. The contract has tumbled over 5 per cent from the high and is currently trading at ₹182 per kg.

Though there is a support near current level at ₹181, the bias remains negative. The resistance in the ₹185-₹186 region is likely to cap the upside in the near term. As long as the contract trades below ₹186, there is a strong likelihood of it breaking below ₹181 in the coming sessions. Such a break will drag the MCX-Zinc futures contract lower to ₹176 or ₹175 in the coming days. The region between ₹176 and ₹175 is a strong support zone which may halt the downmove. A bounce from this support can trigger an upmove towards ₹180 once again.

On the other hand, if the MCX-Zinc futures contract manages to sustain above ₹181, a bounce to ₹190 and ₹194 is possible. In such a scenario, the contract can remain range-bound between ₹181 and ₹194 for some time. A breakout on either side of ₹181 or ₹194 will then determine the direction of the next move.

Global trend

The short-term bias is turning negative for the Zinc (3-month forward) contract on the London Metal Exchange (LME). After oscillating around $2,600 per tonne since the beginning of this month, the contract has been inching lower over the last few days. It is currently trading at $2,539 per tonne.

Immediate support is at $2,500. A break below it will increase the downside pressure. Such a break will drag the LME contract lower to $2,400. On the other hand, if the contract manages to bounce from $2,500, an upmove to $2,600 or $2,650 is likely. In such a scenario, the contract can remain range-bound between $2,500 and $2,650 in the short term.

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

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