Zinc futures (November expiry) on the Multi Commodity Exchange (MCX) bounced off the support at ₹219 early this month. The rally lifted the contract above both 20- and 50-day moving average, a bullish signal.
However, over the past few sessions, zinc futures has been facing a resistance at ₹230. On Monday, it closed at ₹227.
Although there are no signs of a bearish reversal yet, zinc futures needs to surmount the barrier at ₹230 in order to establish the next upswing in price. If the contract prolongs the current consolidation phase, there is a higher likelihood of a fall in price.
A breakout at ₹230 can lift zinc futures to ₹242 or even ₹250. On the other hand, a decline from the current level can drag the contract to ₹224, where both 20- and 50-day moving averages are expected to converge in one or two sessions. Support below ₹224 can be seen at ₹221 and ₹219.
That said, the bias remains bullish at the moment.
Wait for zinc futures to break out of ₹230 and then initiate fresh long positions. Target and stop-loss for this trade can be placed at ₹242 and ₹224, respectively.