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The zinc futures continuous contract on MCX has breached a key resistance in the band between ₹240 and ₹243 gaining 2 per cent on Friday. Extending the momentum, the contract has advanced 1.86 per cent to trade at ₹245.9 on Monday. With this rally, the contract has emphatically surpassed the medium-term resistance at ₹243. In February this year, the contract met withresistance at around ₹240 and witnessed a corrective down-move that got arrested at ₹210 in early March. Since then, the contract has been in a medium-term uptrend. With the recent move, the contract appears have resumed its uptrend. It trades above the 21- and 50-day moving averages. The short-term trend is also up.
The daily relative strength index has entered the bullish zone. Further, the daily as well as the weekly price rate of change indicators imply buying interest. Trader with a short-term horizon can buy the contract on dips with a stop-loss at ₹223. The medium uptrend has the potential to test resistance at ₹250 initially and then ₹260.
On the downside, a conclusive fall below the immediate support level of ₹227 will alter the short-term uptrend and drag the contract lower to ₹220 levels. A further decline under the key medium-term base level of ₹220 will alter the medium-term uptrend in place since March at ₹210. Supports are ₹214 and ₹200 levels.
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