The continuous contract of zinc on the Multi Commodity Exchange (MCX), which was consolidating between ₹284 and ₹290 since December last year, broke out of ₹290 in mid-January this year. Post breakout the contract has been inching upwards. Consequently, early this week, the contract made a daily close above ₹300 making the case stronger for the bulls, who already are well-positioned to lift the price of zinc futures. As long as the contract remains above ₹290, the short-term trend will be bullish.

From the current levels, the contract is likely to retest the prior high of ₹326.8 made in October last year. But whether the contract can move beyond this level need to be closely monitored as this is a strong hurdle. At least a corrective decline can be expected after the futures hit this level. So, traders are advised to plan you trades accordingly. Below is our recommendation.

Go long at the current level of ₹300 and accumulate if the price dips to ₹295, where the 21-day moving average lies currently. Place stop-loss at ₹288. We had recommended longs on January 20 at around ₹295 with stop-loss at ₹282. Those who hold this position can now tighten the stop-loss to ₹288. When the contract rallies past ₹310, revise this stop-loss upwards to ₹295. Liquidate all long positions lead futures touch ₹325.

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