The zinc futures contract on the Multi Commodity Exchange has faced a strong resistance at around ₹210 per kg in the past week. Cluster of resistances between ₹209 and ₹210 capped the upside in the contract which stuck to a narrow range below this resistance over the last week. It is currently trading at ₹208/kg.

Mixed outlook

The immediate outlook is mixed. Whether the contract breaks above the resistance level of ₹210 or not will decide the next move. Traders can stay out of the market until a clear trend emerges.

If the contract remains below ₹210, it can come under pressure. A fall to ₹200 is possible in that case. A break below ₹200 can pull the contract further lower to ₹197 or ₹195.

The region between ₹197 and ₹195 is a strong long-term support zone for the contract. So, a fall below ₹195 is less probable. A strong upward reversal from this support zone will be very bullish from a long-term perspective.

On the other hand, if it manages to breach the immediate resistance at ₹210 in the coming days, a rally to ₹215 or ₹216 is possible in the short-term.

However, a strong break and a decisive close above ₹216 is needed for the outlook to turn completely bullish. Such a break will see the contract revisiting ₹230 and ₹235 levels over the medium-term. But if the contract reverses lower from ₹216, it can fall to ₹210 and ₹205 levels again. In such a scenario, the contract may remain range-bound between ₹200 and ₹216 for some time.

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

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