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The Zinc futures contract on the Multi Commodity Exchange currently tests a key resistance at around ₹210 per kg. Its 200-day moving average is also poised at this level. The contract now trades at ₹208.8/kg. After taking support at ₹198 in early May the contract began to trend upwards. Since then, the contract has been on a near term uptrend. However, the contract now tests a key resistance. A strong break above ₹210 is needed to take the contract higher to ₹215 and then to ₹220 levels in the short term. Traders can consider taking long positions on a strong rally beyond ₹210 with a fixed stop-loss.
But, failure to breach above ₹210 levels can witness a corrective decline in the contract. An emphatic downward break of ₹205 will alter the short-term uptrend and drag the contract down to ₹200 levels. A strong decline further below the significant support level of ₹200 will strengthen the medium-term downtrend that has been in place from the February high of ₹232 and pull the contract lower to the next key supports level of ₹195 and ₹190. To alter the medium-term downtrend, the contract needs to decisively break above ₹215. Such a breakthrough will pave way for an up move to ₹220 and then to ₹225 over the medium term.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.
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