Commodity Calls

Go short on zinc futures

Akhil Nallamuthu |BL Research Bureau | Updated on: Jun 07, 2022

A rally beyond ₹340 is less likely

While the major trend in zinc is bullish, there has been a considerable weakness seen in the base metal price movements, keeping the short-term trend bearish. The continuous contract of zinc on the MCX has been on a downtrend since mid-April. The price of the contract fell from about ₹380 to mark a three-month low of ₹301 on May 13.

But on getting support at f ₹300, the contract rebounded and is currently trading at around ₹330. Notably, it made a fresh five-week high of ₹339.8 last week before softening to the current level. Nevertheless, over the past week, the contract has been oscillating between ₹330 and ₹338.

The possibility of the contract moving past ₹340 is very low and zinc futures are likely to resume its downtrend anytime soon. It can drop to ₹322 initially, where the 50-day moving average lies. It is expected to decline to the support band of ₹286-292 in two months.

Traders can short zinc futures on the MCX at the current level of ₹330 with stop-loss at ₹345. When price drops below ₹322, revise the stop-loss to ₹338. When it touches ₹300, liquidate half of the total shorts on hold and tighten the stop-loss to ₹315. Book the remaining shorts when the price falls to ₹292 as there could be a bounce off at the support band of ₹286-292.

Published on June 07, 2022
COMMENTS
  1. Comments will be moderated by The Hindu editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.

You May Also Like

Recommended for you