The resistance at ₹205 a kg continues to cap the upside on the Zinc futures contract traded on the Multi Commodity Exchange (MCX) forpast three weeks. The contract made a high of ₹205.7 on September 4 and has come-off sharply from there. It is currently trading at ₹196 , down 4.7 per cent from the recent high. Immediate resistance is at ₹201. As long as the contract trades below this resistance, a fall to ₹192 cannot be ruled out in the coming days. The level of ₹192 is a key trend-line support. Whether the contract manages to reverse higher from there or not will then decide the next move.
If the MCX-Zinc futures contract manages to bounce from ₹192, the downside pressure may ease. In such a scenario, the uptrend that has been in place since June will remain intact. It will then increase the possibility of the contract moving higher to ₹200 and ₹205 levels once again. Traders with a medium-term perspective can wait for dips and go long if the contract reverses higher from ₹192. Stop-loss can be placed at ₹186 for the target of ₹203. Revise the stop-loss higher to ₹195 as soon as the contract moves up to ₹200.
A strong break above ₹205 is needed for the contract to gain fresh momentum. Such a break will pave way for the next targets of ₹210 and ₹215.
On the other hand, if the contract declines below ₹192 in the coming days, the selling pressure may increase. Such a break will increase the likelihood of the fall extending to ₹185 or even lower.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading
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