The uptrend in the Zinc futures contract on the Multi Commodity Exchange (MCX) has gained momentum.
The contract made a low of ₹196 per kg on Friday and has reversed sharply higher from there. It surged to a record high of ₹209 on Tuesday and is currently trading at ₹208.
The strong rally in the past week has taken the contract well above the key resistance level of ₹205. This resistance was restricting the upside in the contract since August.
This indicates that the contract has resumed its medium-term uptrend that has begun from the June low of ₹156/kg.
The outlook is bullish. The region between ₹205 and ₹204 may provide strong support and can limit the downside in the near term.
Dips to this support zone may find fresh buying interest in the contract.
A rally to ₹214 or ₹215 is likely in the short-term.
Traders with a short-term perspective can go long on dips at ₹206. Stop-loss can be placed at ₹202 for the target of ₹214.
Accumulate longs near ₹205. Revise the stop-loss higher to ₹208 as soon as the contract moves up to ₹210.
The bullish outlook mentioned above will get negated only if the contract declines below ₹204.
In such a scenario, a fall to ₹200 is possible.
However, such a down move looks less probable at the moment.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.