MCX-Zinc – moves out of sideways range

The zinc futures contract on the Multi Commodity Exchange has been gaining strength over the last one week. The contract has broken the crucial ₹215-₹217 a kg resistance region. It is currently trading at ₹218 per kg.

The price action over the last one week gives an indication that the prolonged sideways consolidation between ₹200 and ₹217 could have come to an end. The ₹217-₹215 region will now act as a good support and may limit the downside in the near term. As long as the contract remains above ₹215, the outlook will be bullish. An upmove to ₹222 is likely in the coming days. Inability to break above ₹222 can trigger an intermediate pull-back move to ₹217. However, the overall bullish outlook will continue to remain intact.

An eventual break above ₹222, will the boost the momentum. Such a break will then increase the likelihood of the contract targeting ₹232 or even higher levels over the medium term. The bullish outlook will get negated only if the MCX-Zinc futures contract declines below ₹215. In such a scenario, the contract can fall to ₹210 or even ₹205.

Trading strategy

Traders with a medium-term perspective can go long. Stop-loss can be placed at ₹206 for the target of ₹240. Revise the stop-loss higher to ₹220 as soon as the contract moves up to ₹225.

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

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