The Multi Commodity Exchange Zinc futures contract of September expiry found strong resistance at ₹189 levels, from where the contract fell to ₹183.75, losing 2.8 per cent. The dynamic 50-day moving average resistance, which coincides with this level, limited the recovery last week.

However, the contract surged during the first half of the current week and retested the ₹189 level but failed to move beyond it and slumped for the second time in the last five sessions, adding to the significance of that price level. On Thursday, the contract was trading flat, but below the 50-day moving average. The movement of the contract seems to be restricted between ₹183.75 — the 21-day moving average — and ₹189. Even though the daily Relative Strength Index remains above the mid-point of 50, there’s a visible loss in strength of the bullish recovery.

Futures contracts of Zinc on the London Metal Exchange inched up past the resistance at $2,333, and is trading at $2,355 a tonne after oscillating between $2,208 and $2,333 for the past few weeks. After breaching the 21-day moving average resistance, the contract is currently trading above the 50-day moving average at $2,345, implying a bullish bias. Hence, unless the price drops below $2,333, the contract will maintain that bias where it faces the next resistance at $2,400. Alternatively, if the contract traces a downward path and falls below $2,333, the price will, most likely, slide to lower levels, potentially towards $2,290 in the coming days.

In the event of the bullish trend regaining strength corroborated by the bullish bias in the global trend and breaches the ₹189 level, the price can move rapidly to ₹192.90, beyond which ₹195 is the resistance. However, further weakness might drag the contract price back to ₹183.75 levels with ₹182 being the support below it. So, the key levels at ₹183.75 and ₹189 should be closely monitored. It would be better to take a directional bet only when either of these levels are breached.

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