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Zinc futures contract on the Multi Commodity Exchange (MCX) extended its down-move as expected last week. The contract has plummeted 6.8 per cent over the last one week. It is currently trading at ₹183 per kg. The recent sharp fall has intensified the downtrend that has been in place since June.
The bearish outlook remains intact. Immediate resistance is at ₹185. The next key resistance is in the ₹190-192 zone which is likely to cap the upside in the short term. Any intermediate rally breaking above ₹185 is likely to be short-lived as fresh selling interest may emerge at higher levels.
A fall to ₹175 is possible in the coming days. A bounce back from ₹175 can trigger a relief rally to ₹185. Since the contract has fallen sharply in a short span of time, a bounce from ₹175 to ₹185 cannot be ruled out. But if the MCX-Zinc futures contract breaks below ₹175, the current down-move can extend to ₹170 or even ₹165.
Trading strategy
Medium-term traders who have taken short positions a couple of weeks ago at ₹196, ₹199 and ₹203 can continue to hold the positions. Revise the stop-loss lower to ₹193. Move the stop-loss further lower to ₹182 as soon as the contract moves down to ₹178. Book profits at ₹175.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.
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