The zinc futures contract on the Multi Commodity Exchange (MCX) broke above the crucial resistance in the ₹215-₹217 a kg region as expected, but it failed to sustain higher. The contract made a high of ₹219.15 a kg last Wednesday and has come-off from there. The contract has tumbled 4.6 per cent from this high and is currently trading at ₹209 per kg.

The near-term view is negative. However, series of supports can restrict the pace of fall in the coming days. Also, the possibility of the contract reversing higher again after testing the supports cannot be ruled out.

Key near-term supports are at current levels and at ₹207.3. A break below ₹207.3 looks less probable. An upward reversal from this support can ease the downside pressure. In that case, it will then increase the possibility of the contract revisiting to ₹215 and ₹220 levels in the short term.

On the other hand, if the MCX-Zinc futures contract breaks below ₹207.3 decisively, it will strengthen the down-move. In such a scenario, the likelihood of the contract extending its fall to ₹204 or even ₹200 will increase on the back of profit booking.

Trading strategy

Medium-term traders who have taken long positions last week can hold it. Retain the stop-loss at ₹206 for the target of ₹240. Revise the stop-loss higher to ₹220 as soon as the contract moves up to ₹225.

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

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