The uptrend in the zinc futures contract on the Multi Commodity Exchange (MCX) came to a pause last week. The contract made a high of ₹218.8 a kg on October 3 and has moved lower from there. It is currently trading at ₹213. The immediate outlook is not clear.

Resistance is at around ₹218. As long as the contract trades below this hurdle, a fall to ₹210 and then to ₹206 or even ₹204 cannot be ruled out in the short-term. The region between ₹204 and ₹206 is a key support zone which is likely to limit the downside. A break below ₹204 is unlikely. An eventual upward reversal can take the contract higher to ₹215 and ₹220 levels again.

On the other hand, if the contract manages to breach and close decisively above ₹218 in the coming days, it can gain momentum. In such a scenario, a fresh rally to ₹225 or ₹226 is possible. Short-term traders with a high-risk appetite can go long on a strong break above ₹218. The stop-loss can be placed at ₹214 for the target of ₹225. Revise the stop-loss higher to ₹220 as soon as the contract moves up to ₹222.

The region at around ₹226 is a key resistance which is likely to cap the upside if the MCX-Zinc futures contract extends its upmove from current levels itself. A corrective fall to ₹220 or even lower levels cannot be ruled out after testing this hurdle.

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

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