The Zinc futures contract on the Multi Commodity Exchange has slumped over 6 per cent from its high of ₹193.3 a kg in the past week. This fall has dragged the contract decisively below a key support at around ₹185.
The contract is currently trading at around ₹180.6 . The level of ₹185 will now act as a strong resistance for the contract. An immediate break above this hurdle might not be easy at this moment. Immediate support is at ₹179.6 — the 100-day moving average.
If the contract manages to sustain above this support, a rise to ₹185 is possible in the near term. In such a scenario, a range bound move between ₹180 and ₹185 can be seen for some time. The bias on the chart is negative. The upside in the contract is expected to be capped at ₹185.
An intermediate bounce to this level may find fresh sellers coming into the market.
An eventual break below ₹180 can see the downward move extending to ₹175 or even ₹170 in the coming weeks.
Traders with a big risk appetite can wait for a bounce and go short near ₹185. A stop-loss can be placed at ₹190 for the target of ₹175.
The downside pressure in the contract will ease only if it rallies above ₹190 decisively. But such a strong surge looks unlikely in the near-term.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading
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