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The Zinc futures contract is not gaining strength. Though the contract moved up in the past week, it is not gaining momentum to breach the crucial resistance at ₹216 per kg. The contract has been hovering below this resistance in a narrow range since last week. The contract is stuck in the band between ₹212 and ₹216 a kg. Within this range the contract hovers below the crucial resistance at ₹214 per kg.
Trend decider
Whether the MCX-Zinc contract manages to break above ₹216 or not will decide the next move. A strong break and a decisive close above ₹216 will be positive for the contract. Such a break will mark the end of the downtrend that has been in place since February. And, also turn the outlook positive for the contract. It can pave way for the next target of ₹220. Further break above ₹220 will then increase the likelihood of the contract revisiting ₹230 and ₹233 levels over the medium term.
On the other hand, if the MCX-Zinc futures contract fails to breach ₹216 in the coming sessions and reverses lower, it can decline below ₹212. A fall below ₹212 can drag the contract towards ₹210 and ₹208 again.
Trading strategy
Medium-term traders with a high-risk appetite can go long on a break above ₹216. Keep the stop-loss at ₹210 for the target of ₹228. Revise the stop-loss higher to ₹218 as soon as the contract moves up to ₹220.
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