Zinc futures (April contract) on the Multi Commodity Exchange (MCX) rallied in the first half of March. However, after facing resistance at ₹227, the contract depreciated. On Monday, it closed at ₹220.60.
The contract has a support at ₹219. If this level is breached, the downswing will most likely extend to ₹212, a support. On the other hand, if zinc futures rebounds on the back of the support at ₹219, it will face resistance at ₹223. Subsequent resistance is at ₹227.
The daily chart shows that, broadly, zinc futures has been oscillating between ₹219 and ₹223. So, technically, the breach of either of these levels will lend us a clue about the next leg of trend. That said, since the contract is now below the 20-day moving average, there is a bearish bias.
Trading strategy
Stay away for now. Go short on zinc futures (April expiry) if it breaks below the support at ₹219. Target and stop-loss can be at ₹212 and ₹223 respectively.