The zinc futures contract on the Multi Commodity Exchange of India extended its upmove in the past week as expected. The contract surged 4 per cent intra-week to a high of ₹193.4 per kg on Monday. But it has slightly come off from the high and is currently trading at ₹191.5 per kg.

Support is in the band between ₹190 and ₹189. The 200-DMA and a key trendline support are poised in this region. Whether the contract manages to sustain above this support zone or not will determine the direction of the next move. If the contract declines decisively below ₹189, a fall to ₹185 is possible on the back of profit-booking.

On the other hand, if the MCX-Zinc futures contract sustains above ₹189, there is a strong likelihood of it breaching the near-term resistance level of ₹193.5. Such a break can take the contract higher initially to ₹196.5. A further break above ₹196.5 will then increase the possibility of the upmove extending towards ₹200 and ₹203.

Short-term traders with high risk appetite can go long on dips at ₹190. Stop-loss can be placed at ₹186 for the target of ₹198. Revise the stop-loss higher to ₹192 as soon as the contract moves up to ₹195.

Global trend

The Zinc (three-month forward) contract on the LME has risen breaking above the key resistance level of $2,635 per tonne. The contract surged 4 per cent in the past week and is currently trading at $2,680 per tonne.

The level of $2,635 will now act as a strong support. Intermediate dips to this support level are likely to find fresh buyers coming into the market. A break below $2,635 looks less likely. An upmove to $2,735 is possible in the near term. A strong break above $2,735 will then increase the likelihood of the contract extending its rally towards $2,800 in the coming weeks.

Note: The recommendations are based on technical analysis and there is a risk of loss in trading.