The uptrend in the Zinc futures contract on the Multi Commodity Exchange (MCX) is gaining momentum. The contract extended its rally for the third consecutive week. It surged about 3 per cent last week to record a high of ₹182.85 per kg on Monday. It has come-off from this high and is currently trading at around ₹180 per kg. The 61.8 per cent Fibonacci retracement resistance at ₹182 is capping the upside at the moment.
Inability to break above this hurdle in the coming days may increase the possibility of a corrective fall in the coming days. Immediate support is in the ₹179-₹178 region. A strong break below ₹178 can drag the contract lower to ₹175 initially. Further break below ₹175 may increase the likelihood of the contract extending its corrective fall to ₹173. The region between ₹175 and ₹173 is a strong support zone dips to which is more likely to attract fresh buyers into the market. As such further fall below ₹173 is less likely. An eventual reversal from the ₹175-₹173 support zone can take contract higher to ₹180 and ₹182 once again. A decisive break above ₹182 can boost the momentum and take the contract higher to ₹190 or even ₹195 thereafter.
Short-term traders can make use of dips to go long near ₹175. Stop-loss can be placed at ₹172 for the target of ₹181. Revise the stop-loss higher to ₹177 as soon as the contract moves up to ₹179.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading
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