For nearly two months, the price of zinc has been falling. Consequently, the zinc futures on the Multi Commodity Exchange (MCX) declined. Since the beginning of February, the March contract dropped its price—it fell from about ₹300 to the current level of ₹253.
However, the contract is trading in a support region as it still remains above ₹250. We expect the contract to gain traction and move up going forward on the back of the support at ₹250. The contract might rally to ₹277 in the short-term. A breach of this can lift the contract to ₹300.
However, if the contract sees a daily close below ₹250, the trend will turn bearish where we might see a decline to ₹242, a notable support. Subsequent support is at ₹225.
Trade strategy
A couple of weeks ago, we suggested initiating a fresh long position at ₹260 with an initial stop-loss at ₹245. Hold this trade.
When the contract recovers from the current level and rises above the minor hurdle at ₹277, revise the stop-loss up to ₹270. Further tighten the stop-loss to ₹278 when the price rises above ₹286. Book profits at ₹295.