The zinc futures contract on the Multi Commodity Exchange (MCX) is retaining its strength and has extended its rally in the past week as expected. The contract witnessed an intermediate dip, but the down-move was short-lived. It has reversed sharply higher from the low of ₹193.3 per kg on Monday. It is currently trading at ₹203 per kg.

The sharp bounce-back indicates the contract is getting strong buying interest at lower levels. This keeps the overall bullish outlook intact. However, a key resistance is ahead in the ₹205-₹206 region. This hurdle is likely to be tested in the coming sessions. But whether the MCX-Zinc futures contract breaks above ₹206 or not will be key in deciding the next move. Traders can stay out of the market until a clear trade signal emerges.

A pull-back from the ₹205-₹206 resistance region can trigger a corrective fall in the coming days. In such a scenario, the contract can decline to ₹195 or ₹193 again. A bounce from the ₹195-₹193 support region can take the contract higher to ₹200 levels again. In that case a range-bound move between ₹193 and ₹206 can be seen for some time. But if the contract breaks below ₹193, the corrective fall can extend to ₹189 or ₹188.

On the other hand, if the MCX-Zinc futures contract breaches ₹206 decisively, the up-move can gain further momentum. Such a break will then increase the likelihood of the contract extending its rally to ₹210 or even ₹215 levels 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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