The Zinc futures contract on the Multi Commodity Exchange (MCX) has been struggling to breach the psychological level of ₹200 per kg. The contract has tested this resistance several times over the last one month. It is currently hovering just below this psychological hurdle at ₹199 per kg.

On the charts, the price action leaves the bias bullish. It leaves the possibility high of the contract breaking above ₹200 in the coming days. Such a break can take the MCX-Zinc contract initially higher to ₹202 or ₹203. A further break above ₹203 will then increase the likelihood of the contract moving higher to ₹208 and ₹209 over the short-term. Such a rally will strengthen the medium-term bullish outlook. In such a scenario, there is a strong likelihood of the contract targeting ₹215 and ₹217 levels over the medium-term.

Trading strategy

Traders with a medium-term perspective can make use of dips to go long at ₹195 and ₹193. Stop-loss can be placed at ₹187 for the target of ₹213. Revise the stop-loss higher to ₹195 as soon as the contract moves up to ₹201.

Global trend

The Zinc (three-month rolling forward) contract on the London Metal Exchange (LME) has been oscillating between $2,750 and $2,900 a tonne. Within this range, it is currently trading at $2,832.

Key supports are at $2,780 and $2,760. As long as the contract trades above these supports, the outlook will remain positive. There is a strong likelihood of the contract breaking above $2,900 in the coming days. Such a break can take it to $2,960.

The bullish outlook will get negated if the LME-Zinc contract declines decisively below $2,760. In such a scenario, a fall to $2,700 is possible.

(Note: The recommendations are based on technical analysis and there is a risk of loss in trading.)

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