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The short-term outlook for Zinc futures contract traded on the Multi Commodity Exchange (MCX) is bullish. The contract has surged breaking above the key resistances at ₹277 and ₹281 on Wednesday. It is currently trading at ₹284. It has also confirmed an inverted head and shoulder pattern on the daily chart. The neckline support of this pattern is coming up around ₹277.
Outlook
The price action since September shows a strong base formation. This, coupled with an inverted head and shoulder pattern, strengthens the bullish case for a trend reversal. The moving averages also give a bullish signal. As such, any intermediate dips can find support around ₹277. The contract has potential to rise towards ₹295-₹300 over the next one-two weeks.
The bullish outlook will get negated only if MCX Zinc declines below ₹277 . In that case, a fall to ₹270 and lower levels can be seen.
Trading Strategy
Last week we had suggested to go long at ₹271. The revised stop-loss for that position is now at ₹274. Move the stop-loss for that position to ₹278. When the contract rises to ₹288, move the stop-loss further up to ₹283. Exit the longs at ₹290.
Traders not holding any positions can go long at current levels. Accumulate on dips at ₹278. Keep the stop-loss at ₹273. Revise the stop-loss up to ₹286 as soon as the contract moves up to ₹291. Move the stop-loss further up to ₹293 when the MCX Zinc contract touches ₹296 on the upside. Book profits at ₹298.
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