Technical Analysis

MCX-Zinc can dip before resuming the uptrend

Gurumurthy K BL Research Bureau | Updated on March 05, 2019 Published on March 05, 2019

The Zinc futures contract on the MCX moved higher as expected last week breaking above the resistance at ₹199 per kg. However, the contract has come-off after making a high of ₹201 per kg on Friday. The contract has declined over 2 per cent from the week’s high and is currently trading at ₹196 per kg.

The recent pullback move indicates that the contract is lacking fresh follow-through buyers above the psychological level of ₹200. This leaves the near-term outlook negative. Though the overall view remains bullish, a corrective fall is likely before the contract resumes its uptrend.

As such, as long as the contract trades below ₹200, a dip to ₹193 is possible in the near-term. A break below ₹193 will then increase the likelihood of the contract extending its downmove to ₹191 and ₹190. A further fall below ₹190 looks unlikely at the moment.

An upward reversal from ₹193 or the ₹191-190 support region will see the contract retesting ₹200 levels. The region between ₹202 and ₹203 is a crucial resistance. A strong break and a decisive close above ₹203 is needed for the MCX-Zinc contract to gain fresh momentum. Such a break will then pave way for a fresh rally targeting ₹210 over the medium-term.

Global trend

The Zinc (three-month forward) contract on the LME made a high of $2,804 per tonne on Monday and has come-off from there. It is currently trading at $2,751 per tonne. Immediate support is at $2,735. A break below it can drag the contract to $2,700 and $2,685.

On the other hand, if the LME-Zinc contract sustains above $2,735, a sideways move between $2,735 and $2,800 is possible. An eventual break above $2,800 can take it initially to $2,835. A further break above $2,835 will pave way for the medium-term target of $3,000.

(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