Comments
The zinc futures contract traded on the Multi Commodity Exchange (MCX) has tumbled about 7 per cent in the past week. Concerns of slow down in China and Europe have put the entire metal space under big pressure in last couple of months. Data released on Tuesday show that China’s economy grew by 7.3 per cent as against the market expectation of 7.2 per cent has not helped in easing the downside pressure for zinc as the metal is continuing to extend its fall. This reflects the inherent weakness in the commodity. It also offers a good chance for short-term traders to initiate fresh short position in the MCX-zinc futures contract.
Short-term view: The short-term view is bearish. The MCX-zinc futures contract has decisively broken its important 21- and 100-day moving average support levels in the previous week. Immediate resistance is a ₹135 per kg and the next key short-term resistance is at ₹137.3 –the 100-day moving average level. Any intermediate rallies to these levels could find fresh selling interest coming into the market. While below these resistances, the contract can fall to ₹130 in the short-term.
Traders with a short-term perspective can go short in this contract with a stop-loss at ₹136.5 for the target of ₹131.
The short-term outlook will turn positive only if the contract records a strong close above the 100-day moving average, currently at ₹137.3. In such a scenario, the contract can rise to its next target of ₹142.
Medium-term view: The medium-term trend is up for the MCX-zinc futures contract. It has a strong trend-line support at ₹129. There is no danger for the contract from a medium-term perspective as long as it trades above this level. An upward reversal from ₹130 in the coming days will keep the uptrend intact. It can then take the contract higher again towards ₹145 levels over the medium-term.
On the other hand, the medium-term outlook will turn negative if the contract breaks below ₹129. Such a break can take it lower to ₹122 or even ₹120 in the coming weeks.
Note: Price as of 6PM on Tuesday. The recommendations are based on technical analysis. There is a risk of loss in trading.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.