MCX-Zinc stuck in a narrow range

Zinc futures contract traded on the Multi Commodity Exchange (MCX) has been range-bound between ₹161 and ₹173 a kg over the past six weeks. Within this range, the contract touched a low of ₹161.3 on Tuesday, but bounced back from there. It is currently trading at ₹164.

This rebound has reduced the possibility of the contract declining below ₹161 in the near term, and it can keep the contract within the range for some more time. As such, there is a strong likelihood of the contract rallying in the coming days to ₹170 — and even to ₹173, the upper end of the range.

If the contract fails to break above the ₹172-₹173 resistance region and reverses lower, it can fall to ₹163 and ₹161 again. A breakout on either side of ₹161 or ₹173 will then decide the next leg of move for the contract.

A strong break above ₹173 will signal a trend reversal. If the contract can sustain this break, a rally to ₹179 is possible thereafter.

On the other hand, if the contract breaks below ₹161, it can come under renewed pressure as it would mean that the strong downtrend that has been in place since February is intact. Such a break can take the contract lower to ₹158.

A further fall below ₹158 will increase the likelihood of the contract tumbling to ₹150 levels thereafter.

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

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