The Zinc futures contract on the Multi Commodity Exchange of India (MCX) extended its upmove in the past week. The contract has risen about 2 per cent in the past week breaking above the key resistance level of ₹191.5 per kg. It is currently trading at ₹195 per kg.
The outlook is positive and the MCX-Zinc futures contract can move further higher in the coming days. Key support is in the ₹192-₹191 zone which is likely to limit the downside. Dips to this support zone is likely to find fresh buyers coming into the market. An up-move to ₹199 is likely in the near term. A break above ₹199 can take the contract higher to ₹203. The region between ₹202 and ₹203 is crucial medium-term resistance. Inability to breach ₹203 can trigger a pull-back move to ₹195 or even ₹190 again. But a strong break and a decisive close above ₹203 will boost the momentum. It will then increase the likelihood of the contract rallying to ₹215 over the medium term.
Trading strategy
Medium-term traders who have taken long positions at ₹195 and ₹193 can hold it. Retain the stop-loss at ₹183 for the target of ₹212. Revise the stop-loss higher to ₹198 as soon as the contract moves up to ₹201. Move the stop-loss to ₹202 when the contract moves up to ₹208.
Global trend
The Zinc (3-month forward) contract on the London Metal Exchange (LME) has risen over 2 per cent in the past week. It is currently trading at $2,719 per tonne. Near-term outlook is bullish. A rise to $2,820 looks likely in the near term. The level of $2,820 is a strong medium-term trend resistance. Inability to breach this hurdle can trigger a pull-back move to $2,650. But a strong break above $2,820 will pave way for the next target of $2,930.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.