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The Zinc futures contract on the Multi Commodity Exchange (MCX) has been moving in a sideways range, between ₹162a kg and ₹171 , for almost a month.
Within this range, the contract had risen in the past week and is hovering below the upper end of the range at ₹170. It was at a high of ₹170.7 on Tuesday and has come off slightly from there.
The contract is currently trading near ₹169. An inability to rise again from current levels and break above ₹171 decisively may pull the contract lower to ₹165 and ₹162 in the short term.
In such a scenario, the ₹162-₹171 sideways range will remain intact for some more time. But if the MCX-Zinc futures contract manages to rise decisively above ₹171 and the 200-day moving average resistance at ₹171.3 in the coming days, it can gain fresh momentum.
Such a break can take the contract higher to ₹175 initially. A further break above ₹175 will increase the likelihood of the contract extending its rally to ₹180 or even ₹185 levels thereafter.
The range support at ₹162 will continue to remain as a crucial level to watch.
The outlook will turn negative only if the contract declines below this support decisively. Such a fall will increase the downside pressure and drag the contract lower to ₹155 or even ₹150 going forward.
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