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Zinc prices, after staying volatile during the first two months of this year, witnessed a steady increase until recently. However, over the past week, prices have come under pressure. Thus, the continuous contract of the metal on the Multi Commodity Exchange (MCX), after marking a high of ₹320.55 a week ago, has now slipped to ₹282, shedding some 12 per cent in a week.
Nevertheless, the overall uptrend has not come under threat i.e., the short-term trend will remain bullish until the contract remains above 21- and 50-day moving average, which currently lies at ₹275 and ₹256, respectively. Also, the 61.8 per cent Fibonacci retracement level of the prior rally coincide at ₹275, making it a key support. The medium-term trend will remain positive as long as the contract is above ₹230.
Going forward, the contract may see price moderation between ₹270 and ₹275 before resuming its uptrend. The possibility of the contract staying sideways around these levels for some time cannot be rejected. Therefore, traders can go long between ₹270 and ₹275. Place stop-loss at ₹258, a potential support level. A rally, thereafter, can lift it to ₹300, where one can exit partially. Post that, shift the stop-loss upwards to ₹270 and look for a target of ₹320.
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