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The Zinc futures contract on the Multi Commodity Exchange (MCX) seems to be lacking momentum. The bounce-back move from the low of ₹170.7 per kg made on July 16 faces strong resistance in the ₹180-₹183 region . The contract has been oscillating around ₹180 over the last one week. This indicates that the MCX-Zinc futures contract lacks fresh buyers to take it decisively higher. It is currently trading at ₹179 per kg.
The 21-day moving average resistance is at ₹182. The contract has to breach this hurdle decisively in order to gain momentum. Such a break will pave the way for a fresh rally to ₹190 or ₹192 on the back of short covering.
But as long as the contract remains below ₹182, there is a strong likelihood of seeing a fresh fall in the coming days. The overall downtrend will remain intact. Key supports are at ₹174 and ₹171. A strong break and a decisive close below ₹171 will bring renewed pressure on the contract. Such a break will then increase the possibility of the contract tumbling to ₹165 or even ₹160 in the coming weeks.
Trading strategy
Short-term traders with a high-risk appetite can go short at current levels and at ₹181. Stop-loss can be placed at ₹185 for the target of ₹167. Revise the stop-loss lower to ₹176 as soon as the contract moves down to ₹173.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.
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