The zinc futures continuous contract on MCX had encountered a key resistance at ₹240 per kg in late April this year and moved sideways in the band between ₹227 and ₹240. After testing the upper boundary, the contract slumped 2.5 per cent to trade at around ₹235 on Thursday. The key resistance at ₹240 has been limiting the upside since late April and this level has become a significant hurdle to note.
The daily relative strength index has slipped into the neutral region from the bullish zone and the weekly RSI is displaying negative divergence implying trend reverses is on the cards. A conclusive plunge below the lower boundary at ₹227 will alter the sideways trend and pull the contract down to ₹220 levels. A decisive downward breakthrough of the support at ₹220 will alter the medium-term uptrend that has been in place from this January low at ₹202. Next supports are placed at ₹214 and ₹200 levels. Trader with a near-term view can sell the contract on rallies with a stop-loss at ₹240 and consider booking partial profit at ₹227 levels.
On the upside, an emphatic upward break of the vital resistance at ₹240 will strengthen the medium uptrend and pave way for an up-move to ₹250 and then to ₹260 levels.