MCX zinc futures contracts have declined almost 9 per cent from its December high of ₹135.3 a kg. This peak has now become a formidable barrier and the contracts are finding it difficult to get past the resistance around ₹135.

The price action on the chart is indicating a bearish signal, presenting a good short-term trading opportunity.

Short-term view: MCX zinc contracts are close to the resistance at ₹135. This resistance was tested twice since August.

The bearish short-term outlook for zinc has been retained due to its inability to breach this resistance. There is an interim resistance at ₹131 that traders need to watch out for.

That said, there is a strong likelihood of a fallto ₹116 in the coming weeks. Decline below ₹116 will open the doors for a further drop to ₹107.

Traders with a short-term perspective can go short now with a stop-loss at ₹32.

Add to the short positions in short-term pull-backs to the ₹127-130 zone.

Medium-term view: The contract is in a gradual uptrend since 2009. Strong support is at ₹105.

The outlook will remain bullish as long as the contracts trade above this support level.

As such, declines to ₹105 will be a good buying opportunity for medium- term investors. Stop-loss can be at ₹93.

Reversal from ₹105 will have the potential to take the contract to ₹140 over the medium-term.

The bullish outlook will get negated only on a break below ₹95 which is the next key support below ₹105. Subsequent targets are ₹85 and ₹75.

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