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Zinc futures on the Multi Commodity Exchange (MCX) found support at ₹245 and started to rally a couple of weeks back. It surpassed the resistance at ₹255 last week. The August futures closed at ₹264 on Monday.
The price action is positive and the probability of the rally extending is high. While the nearest resistance is at ₹272, a breakout of this can lift the contract to ₹280-285 over the next few weeks.
The zinc futures can turn the direction downwards after appreciating to ₹280-285 price region. Such a move can drag the contract back to ₹272.
Nevertheless, as it stands, the likelihood of a rally is high and so, traders can remain on the long side of the trade.
Trade strategy
We suggested going long on zinc futures at ₹257 last week. Since the contract has moved above ₹263, the revised stop-loss for this trade would be ₹260. Tighten the stop-loss further to ₹265 when the price touches ₹268. Book profits at ₹270.
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