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The upmove in the zinc futures contract on the Multi Commodity Exchange that has been in place for more than a week seem to be losing momentum.
The contract, which has reversed higher after testing the psychological support level of ₹200 per kg on December 8, recorded a high of ₹207 on last Friday. But subsequently the contract reversed lower from there and has come-off to ₹203.5/kg.
The immediate outlook is unclear. Traders can stay out of the market until a clear trend emerges.
The 100-day moving average support is at ₹202.5 which is likely to be tested in the coming sessions. If the contract reverses higher again from this support, there is a strong likelihood of it moving higher to ₹208. The level of ₹208 is a crucial trend-line resistance.
If the contract manages to breach this hurdle, it can gain fresh momentum. Such a break can take the contract higher to ₹212 initially.
Further break above ₹212 will increase the possibility of the upmove extending to ₹214 and ₹216.
On the other hand, if it declines breaking below the 100-day moving average support, the contract can fall to ₹200 and ₹199 levels again.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.
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