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The zinc futures contract on the Multi Commodity Exchange (MCX) is under pressure.
The resistance — at ₹230 a kg — has halted the rally and the contract has reversed sharply lower in the past week. The contract made a high of ₹228.65 on February 2 and has tumbled over 5 per cent to make a low of ₹216.6 on Friday.
However, the contract has managed to bounce from this low and is currently trading at ₹221.5 per kg. Cluster of resistances are poised in between ₹222 — the 21-day moving average and ₹225.
Though an upmove to test these resistances are possible in the near-term, whether the contract breaks decisively above ₹225 or not will be key in determining the next move. If the contract breaks above ₹225, the downside pressure may ease and it can revisit ₹230 levels.
But inability to break above ₹225 and a downward reversal from there will continue to keep the contract under pressure.
In such a scenario, the contract can fall towards ₹213 in the coming days.
Short-term traders can wait for rallies and go short if the contract reverses lower from ₹225.
Stop-loss can be placed at ₹229 for the target of ₹215. Revise the stop-loss lower to ₹222 as soon as the contract moves down to ₹219.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.
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