The price of zinc futures has been moderating over the past week. The December expiry contract, after facing a resistance at ₹293, started to decline.
On Wednesday, it closed at ₹282.10 and on Thursday, too, it faced good selling pressure.
However, the downtrend might come to an end soon. The zinc futures has a support ahead at ₹276, where a rising trendline support coincides.
Juist below ₹276 is another support at ₹270. Therefore, the price region of ₹270-276 can act as a support band.
A potential rebound from this price region can lift the contract back to ₹293. A breakout of this level can intensify the rally and take the contract to ₹315 quickly.
On the other hand, if the contract slips below ₹270, the trend will turn bearish. In such a case, zinc futures can decline to ₹256, a support. Subsequent support is at ₹250.
Whatsoever, the chances for zinc futures to see a drop to ₹270-276 band from the current level is high. The risk-reward will turn favourable for long positions at above-mentioned levels. Also, this is a demand zone.
Trade strategy
Buy zinc futures if the price declines to ₹274. Place stop-loss at ₹265. When the contract rises to ₹282 after the trade is initiated, revise the stop-loss to ₹275. Tighten the stop-loss further to ₹282 when the price hits ₹288. Exit at ₹293.