The zinc futures contract on the Multi Commodity Exchange is continuing to face resistance in the ₹200-₹205 region. The contract has been testing this zone continuously over the last three weeks. It rose to ₹202.95 per kg on Wednesday last week but has tumbled over 3 per cent since then. It currently trades at ₹196 per kg.

Though the contract has been broadly rangebound between ₹190 and ₹205 since the beginning of this month, the price action on the charts leaves the short-term outlook bearish. The weekly chart indicates that the MCX-Zinc futures contract is not getting fresh buyers to take it decisively above the psychological level of ₹200. This leaves the possibility high of the contract breaking below ₹190 in the coming days. Such a break can take the contract initially lower to ₹187 or ₹185.

A bounce from the ₹187-₹185 support zone can trigger a relief rally to ₹195. But a strong break below ₹185 will see the downmove extending to ₹180 or even lower levels.

Traders who have taken long positions at ₹200 can exit the trade at current levels.

The bearish outlook will get negated only if the contract manages to breach ₹205 decisively. Such a break will increase the bullish momentum and trigger a fresh rally to ₹213 and ₹217.

Trading strategy

Traders with a high risk appetite can use upticks to go short at ₹199 and ₹202. Stop-loss can be placed at ₹207 for the target of ₹183. Revise the stop-loss lower to ₹197 as soon as the contract moves down to ₹194.

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

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