The October expiry Zinc futures contract on the Multi Commodity Exchange declined over the past week. It pierced below the 21-day moving average, indicating a near term weakness.
On Wednesday, it registered a low of ₹181.05 and is currently trading around ₹184 per Kg. A support band between ₹181.05 and ₹182.65 seems to be arresting the fall. In case if weakness persists and the price tumbles below those levels, the contract can decline to ₹177.3 and ₹174 in the coming days.
On the other hand, if the contract bounces from the current support are, it will face resistances at ₹186.5 and ₹191 levels. Beyond ₹191, there will be change in medium-term trend to bullish and the price could potentially appreciate to ₹200 levels.
Global trend
Three-month rolling forward contract of Zinc on the London Metal Exchange has broken below the 21-day moving average and a critical level at $2,300. The contract is currently trading at $2,290.
This points to a short-term bearish trend which could possibly drag the price to $2,200. Do notice that $2,190 is the 52-week low of the contract. If the contract moves lower from that level, the price could depreciate towards $2,100 levels. However, if the price manages to move above the resistance area between $2,300 and $2,320, it could head northwards to $2,400 levels.
Trading strategy
Price closing above ₹191 levels in a prerequisite to consider that the price action as a trend reversal. The major trend being bearish, and there has been no sustainable recovery in price, traders would be better off initiating short positions on rallies. Hence, it is advisable to sell the October month contract between ₹186 and ₹187 with a stop-loss above the key resistance at ₹191 levels.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.