After hitting a low of ₹214.95 per kg early last week, the Zinc Futures contract on the Multi Commodity Exchange (MCX) has bounced back sharply. The contract is currently trading at ₹227 per kg.
The bounce that has been in place since last week has happened from a very strong trendline support, turning the outlook bullish for the Zinc contract. Strong support is in the ₹222-220 region. A fall below ₹220 looks less likely now. Intermediate dips are likely to get fresh buyers at lower levels. Moving averages indicate that the downside could be limited, strengthening the case for bullishness.
Zinc Futures contract can rise to ₹235-240 over the next three-to-four weeks. The short-term outlook will turn negative only if the Zinc contract falls below ₹220. In that case ₹217-215 levels can be revisited.
Traders can wait for dips. A short-term trade with a holding period of four weeks can be considered at this point of time.
Go long at ₹225 and ₹223. Keep the stop-loss at ₹219. Trail the stop-loss up to ₹227 as soon as the contract moves up to ₹230. Move the stop-loss further up to ₹231 when the price touches ₹233. Exit the long positions at ₹235.