Commodity Calls

MCX-Zinc tests key resistance

Gurumurthy K BL Research Bureau | Updated on July 31, 2018 Published on July 31, 2018

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.

Read the rest of this article by Signing up for Portfolio.It's completely free!

What You'll Get

This article is closed for comments.
Please Email the Editor