The zinc futures contract on the Multi Commodity Exchange (MCX) continued to trade subdued in the past week. The contract tumbled over 4 per cent from ₹173 per kg to hit a low of ₹165.8 on Monday. The contract has however recovered from this low and is currently trading at ₹170 per kg.
The short-term outlook is mixed. Traders can stay out of the market until a clear trend emerges.
The support in the ₹165-₹163 is holding well. As long as the contract remains above ₹165, an up-move to ₹175 or even ₹180 is likely in the near term. But, inability to breach ₹180 can drag the contract lower to ₹170 and ₹165 levels again. In such a scenario, a range-bound move in the band between ₹163 and ₹180 can be seen for some time.
A breakout on either side of ₹163 or ₹180 will determine the next move. A strong break and a decisive close above ₹180 will boost the momentum. Such a break will then increase the likelihood of the contract surging to ₹190 over the short term.
On the other hand, if the MCX-Zinc futures contract breaks below ₹163 in the coming days, a dip to test the next key support level of ₹160 – the 200-week moving average is possible. If the contract manages to bounce from ₹160, a relief rally to ₹170 is possible. But a strong break below ₹160 will bring renewed pressure on the contact. Such a break will increase the possibility of the contract tumbling to ₹155 or even ₹150.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.
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