The zinc futures contract on the Multi Commodity Exchange (MCX) has been hovering at the crucial ₹230-₹232 per kg resistance region for more than a week. This leaves the immediate outlook unclear for the contract.

It is currently trading at ₹229/kg. Support is at ₹227 – the 21-day moving average. Resistance is at ₹232. A breakout on either side of ₹227 or ₹232 will decide the next trend for the contract.

Until then a narrow range bound move between ₹227 and ₹232 can be seen.

If the contract remains below ₹232 and declines breaking below ₹227, it can come under pressure. In such a scenario, the contract can fall to ₹218 or ₹217 again in the short-term.

This downmove could be sharp and swift on the back of profit booking.

On the other hand, if it breaks above ₹232 decisively, it can gain fresh momentum. Such a break will then pave way for a fresh rally towards ₹240 or ₹242.

On the daily chart, the price action over the last one month reflects the formation of an inverted head and shoulders pattern. This is a bullish pattern.

It leaves the bias bullish with an increased possibility of the contract breaking above the neckline resistance at ₹232.

A strong break above ₹232 will confirm this pattern and take the contract higher towards ₹240 or even higher levels.

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

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