Commodity Calls

MCX Zinc hovers above a crucial support base

Gurumurthy K BL Research Bureau | Updated on January 09, 2018

The Zinc futures contract on the Multi Commodity Exchange has come off the high of ₹212 per kg it hit last Wednesday. The contract has tumbled over 3 per cent from this high and is currently trading at ₹204.5.

A key near-term support is at ₹202, which is likely to be tested in the near-term. If the contract bounces higher and manages to sustain above ₹202, a rally to ₹210 or ₹212 is possible again.

But if the zinc futures contract breaks below ₹202, it can fall to test the key short-term support level of ₹199 — the 100-day moving average.

Whether the contract reverses higher from ₹199 or not will determine the next trend. A strong bounce from ₹199 can take the contract higher to ₹205 or ₹207 thereafter. But a break below ₹199 can drag the contract to ₹195 initially. Further break below ₹195 will increase the likelihood of the fall extending to ₹190 or ₹188.

Traders can stay out of the market for the moment. Watch the price action in the coming days to get a clear cue on the next trend.

The bias is negative on the charts for the contract to break below ₹199 eventually and fall to ₹195 or even lower in the coming days.

However, it is too early to take a call on this. The price action in the coming days needs to watched to get a confirmation on this fall.

Note: The recommendations are based on technical analysis and there is a risk of loss in trading.

Published on November 28, 2017

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