Zinc futures: Go long with tight stop-loss

Akhil Nallamuthu |BL Research Bureau | | Updated on: Jun 29, 2022

Go long at the current level of ₹298 and accumulate more if it retests ₹292

The continuous contract of zinc futures on the MCX (Multi Commodity Exchange) is on a fall ever since it made a high of ₹383 in early April. By hitting a low of ₹291 last week, it depreciated by 24 per cent. Nevertheless, it recovered from that level and closed at ₹300.8 on Tuesday. As estimated, a bounce has been witnessed from the ₹292-level as it enjoyed a considerable support.

Although the overall bias is bearish, we expect the recovery to extend. It can rally to ₹318, a resistance level. Subsequent resistance is at ₹322. A breach of this level can take the contract to ₹336.

On the contrary, if the support at ₹292 is invalidated, the contract might see a swift fall to ₹275.

But broadly, we expect the contract to at least rally to ₹322 before witnessing further fall.

So, given the prevailing conditions, one can risk by taking counter trend positions. That is, go long at the current level of ₹298 and accumulate more if it retests ₹292. Stop-loss can be placed at ₹284. When the contract surpasses ₹316, tighten the stop-loss to ₹306. Liquidate all the shorts when the contract touches ₹322.

Note that this is a counter-trend trade and so, this is not for trend followers.

Published on June 29, 2022
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