The strong uptrend in the MCX Zinc futures contract that has been in place since early June has come to a pause in the last week. Technically, the 61.8 per cent Fibonacci retracement resistance at ₹182 has halted this rally and the contract has come off after making a high of ₹182.85 a kg on July 3. The contract made a low of ₹177.25 and has bounced back slightly from there. It is currently trading at ₹179.35 .
The contract will gain fresh momentum only if it surpasses the ₹182 mark decisively. As long as it trades below ₹182, a fall to test the key near-term support at ₹175 cannot be ruled out. If it manages to rebound from this support, a range-bound move between ₹175 and ₹182 is possible for some time. But a fall below ₹175 may increase the downside pressure and drag it to ₹171.
However, the possibility of the contract falling below ₹175 looks less as the price action in the past week signals lack of strong sellers in the market. As such dips to ₹175 may bring in fresh buyers in the contract.
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