The Zinc futures contract on the Multi Commodity Exchange (MCX) was volatile in the past week. The contract made a high of ₹184.45 a kg on July 26 and had reversed sharply lower from there. The contract tumbled over 4 per cent to make a low of ₹176.8 on Friday. However, it has bounced slightly from there and is currently trading at ₹177.8 per kg. The immediate outlook is not clear. The contract has been broadly range bound between ₹175 and ₹185 since the last week of June. A breakout on either side of ₹175 or ₹185 will determine the next trend for the contract. Traders can stay out of the market until the range breakout gives a clear trade signal.
A break below ₹175 will take the contract lower to ₹173 – the 21-week moving average support initially. Further strong break below ₹173 will increase the likelihood of the contract extending its fall to ₹171 or even lower going forward.
On the other hand, if the MCX-Zinc futures contract breaks the range above ₹185 decisively, it can gain momentum. Such a break can take the contract higher to ₹190 initially. Further break above ₹190 will increase the possibility of the contract rallying to ₹195 or even ₹200 thereafter.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading
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