Zinc, which was on a strong surge all through 2016, has been under pressure over the past couple of months.

With an whopping 60 per cent rally in 2016, zinc was a clear outperformer among the base metals last year.

Zinc futures contract on the Multi Commodity Exchange (MCX) skyrocketed 64 per cent from a low of ₹106 a kg to a high of ₹174 last year. But the contract failed to keep up the momentum as it stepped into 2017.

After making a high of ₹198.6 in February, the contract has been on a strong downtrend. It is currently trading at around ₹167.

On the global front, zinc prices on the London Metal Exchange (LME) made a high of $2.980 a tonne in February and has come-off from there to the current levels of $2,625 .

Outlook

On the charts, the short-term view is bearish for zinc prices. MCX-zinc has declined below the key 200-day moving average level of ₹170.

Also, there is a key resistance in the ₹173-₹175 region. As long as the contract trades below ₹175, it will remain under pressure.

The 38.2 per cent Fibonacci retracement level at ₹163 and the 55-week moving average at ₹160 are the key supports to watch which are likely to be tested in the coming days. If the contract manages to reverse higher from ₹160, it can rise to ₹170 or higher levels thereafter. In such a scenario, the contract may remain range bound between ₹160 and ₹175 for some time. But if the MCX-zinc futures contract declines decisively below ₹160, there is a strong likelihood of the downtrend extending to ₹150.

On the global front, if LME zinc prices manage to sustain above $2,600, an intermediate bounce to $2,700 is possible.

But a fall below $,2600 can drag it to $2,530 or $2,500. The level of $2,500 is a crucial support. A strong break below $2,500 will increase the danger of LME zinc prices tumbling to $2,430 or $2,400.

Note: The recommendations are based on technical analysis. There is a risk of loss in trading.

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