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The zinc futures contract on the Multi Commodity Exchange (MCX) fell sharply in the past week breaking below the key support level of ₹227/kg.
The contract tumbled over 6 per cent from around ₹229 to test the low of ₹214. It has, however, bounced back from the low of ₹214.15 and is currently trading at ₹217 .
The contract is currently hovering above a crucial support zone. Cluster of supports are poised in the band between ₹211 and ₹214 which is holding as of now. Whether the contract continues to sustain above this support zone or breaks below it will decide the next move. Traders can stay out of the market until a clear trend and trade signal emerges.
As long as the contract remains above ₹214, a bounce to ₹220 is possible in the near-term. A break above ₹220 will ease the downside pressure and can take the contract higher to ₹225 or ₹227. In such a scenario, the contract can remain in a broad sideways range between ₹214 and ₹232.
On the other hand, if the contract fails to sustain higher and declines breaking below ₹211, the downside pressure can increase. Such a break will increase the likelihood of the contract tumbling towards ₹205 or even ₹200 thereafter.
The price action in the coming days will need a close watch which will give a cue on the next move.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.
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