The strong rally in the zinc futures contract on the Multi Commodity Exchange (MCX) that has been in place since December has halted in the past week.
The contract made a high of ₹229.85 per kg on January 29 and has been consolidating in a sideways range since then. The contract has been stuck in the band between ₹225 and ₹230 over the last one week.
Inability to breach ₹230 in the coming days will increase the likelihood of a corrective fall going forward.
A fall below ₹225 will be an initial sign of weakness. Such a fall can take the contract lower to ₹221 – the 21-day moving average support level.
A bounce from ₹221 can trigger an intermediate upmove towards ₹230 again. In that case, the contract can remain in a broad sideways range between
₹221 and ₹230 for some time. But if the contract breaks below ₹230, it can come under renewed selling pressure.
Such a break will increase the possibility of the contract falling to ₹215 or even ₹210 on the back of profit booking.
On the other hand, if the contract manages to sustain above ₹225 and break ₹230 decisively, it can gain fresh momentum. S
uch a break will see the uptrend resuming towards ₹235 and ₹240.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.