The September expiry contract of Zinc futures on the MCX witnessed volatility in the past week as it tested both ends of the range ₹183.3-189.25, within which it has been moving for the past three weeks. The contract opened at ₹187.3 a kg for the week, and after marking a high of ₹189.25, ie, the upper boundary of the range, it declined 3.2 per cent to ₹183.3 — the lower boundary.

In case the prevailing bearish price swing extends, and the contract breaks below ₹183 levels, it will find support at ₹182. Below this level, there is considerable support at ₹180.7 — the current month low. On the other hand, if the price bounces taking support at the range bottom, it could rally towards ₹185.75, beyond which it will face strong resistance at ₹189 levels.

The three-month rolling forward contract of Zinc on the LME faced stiff resistance at $2,400 and the contract started depreciating from that level. Currently trading at $2,320, it declined below the 21-DMA and is approaching a support in the band between $2,295 and $2,300. However, a break below these levels can intensify the sell-off and drag the price to $2,230 in the days to come. Alternatively, a bounce from the support band may result in the price appreciating to $2,355.

Trading strategy

The recent downtrend in global prices may weigh on the MCX-Zinc futures contract, pushing it to break below the crucial support at ₹183. Also, there’s an equal probability that it might bounce from the current level since it is the range bottom and may become a support level.

Hence, it is advisable to wait until a decisive break of that support is observed. In such a case, one can initiate short positions with stop-loss above ₹186 where the price might potentially depreciate to ₹182 and even to ₹180.7 in the near term.

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