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The Zinc futures contract on the Multi Commodity Exchange (MCX) has reversed lower in the past week after reaching a high of ₹216.5/kg on November 1. The contract hit a low of ₹208.5 on Friday and is trying to bounce back from there.
Lack of momentum has left it hovering around ₹210 the last couple of trading days. It is currently trading around ₹211. A key intermediate resistance is at ₹214. As long as the contract trades below this resistance, the possibility of it falling to ₹207 or ₹206 cannot be ruled out in the coming days. Cluster of supports are poised in between ₹207 and ₹205 and are likely to limit the downside in the short-term.
An upward reversal from this support region will have the potential to take the contract higher to ₹214. A strong break above ₹214 will then pave the way for the next target of ₹220.
Medium-term traders with high risk appetite who have accumulated around ₹210 in the past week can continue holding it.
Retain the stop-loss at ₹206 and revise it higher to ₹210 as soon as the contract moves up to ₹215. The target is ₹230.
On the other hand, the outlook will turn bearish if the contract breaks below ₹205 decisively. Such a break can drag the contract to ₹199 initially. Further break below ₹199 can drag it to ₹195.
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