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The zinc futures contract on the Multi Commodity Exchange (MCX) has been stuck in a sideways range over the last few weeks. The contract has been rangebound between ₹207 and ₹216 a kg over the last one month. Within this range the contract fell from ₹214 to make a low of ₹208.15 last Thursday and has been hovering at this low since then. It is currently trading at ₹210 per kg.
Wait for a breakout
Key support for the contract is in the ₹207-206 region and resistance is at ₹216. A breakout on either side of ₹206 or ₹216 will decide the next trend. Traders can stay out of the market until a range breakout which can give a clear cue on the next trend.
A strong break above ₹216 can ease the downside pressure and take the contract higher to ₹219 or ₹220 initially. Inability to break above ₹220 can trigger a pull-back move to ₹215 again. But a strong break above ₹220 will mark the end of corrective fall that has been in place since late February. Such a break will then increase the likelihood of the contract rallying towards ₹230 levels again.
On the other hand, if the MCX-Zinc futures contract breaks the range below ₹206, it can come under renewed pressure. Such a break can drag the contract lower to ₹200 or ₹199.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.
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