Commodity Calls

MCX-Zinc faces a key resistance

Gurumurthy K | Updated on January 11, 2018 Published on July 04, 2017

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

Published on July 04, 2017
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