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The uptrend in zinc futures contract traded on the Multi Commodity Exchange (MCX) seems to be losing steam. The sharp corrective fall from the December high of ₹204.2 per kg halted at a low of ₹166.85 in the last week of December.
After a strong reversal from this low, the bounce back move seems to have lost momentum over the last few weeks. The contract has been stuck inside a sideways range between ₹180 and ₹195 for more than three weeks. Within this range the contract made a low of ₹184.35 on Monday and is bouncing back from there.
The immediate outlook is not clear. A strong breakout on either side of ₹180 or ₹195 will decide the next leg of move for the MCX-zinc futures contract.
A strong break below ₹180 may increase the downside pressure and drag the contract to ₹175 or ₹173.
The presence of a key trend-line support at around ₹173 leaves the possibility less for the contract declining further below ₹173.
On the other hand, if the contract manages to breach above ₹195 decisively in the coming days, a rise to ₹200 and ₹205 is possible thereafter.
Traders can stay out of the market until the contract makes a range breakout which can give a clear trade signal.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.
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