Technical Analysis

Key supports can provide base for MCX-Zinc

Gurumurthy K BL Research Bureau | Updated on February 12, 2019 Published on February 12, 2019

The Zinc futures contract on the Multi Commodity Exchange of India (MCX) witnessed a sharp corrective fall in the past week as expected. The resistance at ₹203 has held well. The contract made a high of ₹203.35 on February 5 and has come off sharply from there. It has tumbled over 7 per cent from the recent high and is currently trading at ₹188 per kg.

A cluster of key supports are in the band between ₹187 and ₹185 which may halt the corrective fall. An upward reversal from this support zone will see the contract trending higher towards ₹190 and ₹195. A further rally above ₹195 will then increase the likelihood of the contract revisiting the resistance level of ₹203.

On the other hand, if the MCX-Zinc futures contract breaks decisively below ₹185, the downside pressure will increase. In such a scenario, the possibility of the contract tumbling towards ₹175 and ₹170 cannot be ruled out.

Such a fall will keep the broader ₹165-205 sideways range intact. The contract has been trading in the broad sideways range since June 2018.

Medium-term traders who have taken long positions at ₹195 and ₹193 can hold them. Retain the stop-loss at ₹183 for the target of ₹212. Revise the stop-loss higher to ₹202 as soon as the contract moves up to ₹208.

Global trend

The Zinc (three-month forward) contract on the LME has failed to get strong follow through buyers above $2,800. The contract made a high of $2,810 on February 5 and has come off sharply from there. It has tumbled about 6 per cent from this high and is currently trading at $2,644.

Resistance is in the $2,660-2,675 region. As long as the contract trades below this resistance, there is a strong likelihood of it extending its down-move towards $2,600 and $2,570.

(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