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The Zinc futures contract on the Multi Commodity Exchange (MCX) has been on a strong upmove over the last two weeks.
The contract made a low of ₹203 per kg on December 19 and has risen sharply in the past week. The contract has gained about 3 per cent from this low and is currently trading at ₹209/kg. The sharp rally in the past week has taken the contract well above the key ₹205-207 resistance zone.
This leaves the short-term outlook bullish for the contract.
The ₹205-207 region may now act as a good support for the contract and limit the downside in the near-term. Intermediate dips to this support zone may find fresh buyers coming into the market.
As long as the contract sustains above ₹205, there is a strong likelihood of the current upmove extending to ₹211 or ₹213 in the coming days. Inability to break above ₹213 can trigger a pull-back move to ₹208 or ₹207.
Short-term traders with a high-risk appetite can go long on dips at ₹208.
Stop-loss can be placed at ₹205 for the target of ₹213. Revise the stop-loss higher to ₹209.5 as soon as the contract moves up to ₹211.
The 100-day moving average at ₹204 is a key support to watch. The near-term outlook will turn negative only if the contract breaks below this support.
Such a break will increase the likelihood of the contract falling to ₹200 or even lower levels again.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.
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