The zinc futures contract on the Multi Commodity Exchange (MCX) has been sustaining at higher levels in the past week following a strong rally the week earlier. The contract has been stuck between ₹184 and ₹191 per kg and hit a high of ₹191.25 per kg on Monday. However, it has come-off slightly from there and currently trades around the mid-point of this range at ₹188 per kg.

The near-term outlook is positive. However, key resistances are coming up which can slow down the pace of the upmove. Immediate resistance is at ₹193 and the next is at ₹195.5. Whether the MCX-Zinc futures contract breaks above ₹195.5 will determine the direction of the next move.

A decisive close above ₹195.5 will boost the momentum. Such a break will see strong and fresh buying interest coming into the market. It will then increase the likelihood of the contract rallying to ₹200 and ₹203 levels over the medium term.

On the other hand, if the MCX-Zinc futures contract reverses lower from the ₹193-₹195.5 resistance zone, a pull-back to ₹190 or ₹185 is possible.

Trading strategy

Medium-term traders can hold the long positions taken at ₹186. Revise the stop-loss higher to ₹182 for the target of ₹199. Move the stop-loss further higher to ₹190 as soon as the contract moves up to ₹192.

Global trend

The Zinc (3-month forward) contract on the London Metal Exchange (LME) has been hovering around a key resistance level of $2,630 per tonne over the last one week. The contract has been oscillating around $2,600 for some time.

Inability to breach $2,630 can drag the contract lower to $2,500 or even $2,400 in the coming weeks. On the other hand, a strong break and a decisive close above $2,630 is needed to gain fresh momentum. Such a break can take the contract higher to $2,700.

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

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