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The bounce back move in the Zinc futures contract on the Multi Commodity Exchange (MCX) seems to have lost momentum. The contract made a low of ₹156.1a kg last Wednesday and reversed higher. But this upmove halted at a high of ₹163.3 on Friday and the prices have reversed sharply lower from there. The Zinc futures contract is currently trading at ₹157.6, down about 3.5 per cent from Friday’s high. A test of the crucial support at ₹156 is likely in the coming sessions. Whether the contract reverses higher or not from this support level will decide the next move for it.
If the contract manages to bounce back again from ₹156, the downside pressure will ease. A rise to ₹163 and ₹165 is possible in such a scenario. But if the MCX-Zinc futures contract declines below ₹156 decisively, it come under more pressure. Such a break will also mean that the down trend that has been in place since February is intact. It will also increase the likelihood of the contract extending its down move to ₹150- the 50 per cent Fibonacci retracement support level in the coming days.
Inability to break above ₹163 last week and a sharp reversal keeps the bias bearish. As such the possibility is high of the contract breaking below ₹156 and falling to ₹150 in the coming days.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading
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