The zinc futures contract on the Multi Commodity Exchange (MCX) got a breather in the past week. The contract, which was falling sharply over the last several weeks, found support recently and has witnessed a bounce-back move in the past week. The contract has reversed higher from its low at around ₹171 per kg and made a high of ₹182.55 last week on Friday. But, the contract has come-off slightly from this high and is currently trading at ₹179 per kg.

The bounce-back move witnessed in the past week is technically significant as it has happened from a significant long-term support level of ₹175. Whether the contract manages to sustain above ₹175 or not will be key in deciding the next move.

If the contract continues to trade above ₹175 and manages to break above the immediate resistance level of ₹183, an upmove to ₹186 or ₹190 is possible. Further rally beyond ₹190 looks less probable at the moment. The contract can remain range-bound in the band between ₹175 and ₹90.

On the other hand, if the MCX-Zinc futures contract breaks decisively below ₹175 in the coming days, it can come under renewed pressure. Such a break will then increase the likelihood of the contract tumbling to ₹170 or even ₹165 in the coming weeks.

Trading strategy

Short-term traders with a high-risk appetite can wait for a bounce and go short at ₹186 and ₹189. Stop-loss can be placed at ₹194 for the target of ₹175. Revise the stop-loss lower to ₹184 as soon as the contract moves down to ₹180.

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

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