The Zinc futures contract on the Multi Commodity Exchange of India (MCX) witnessed a sharp corrective fall in the past week as expected. The resistance at ₹203 has held well. The contract made a high of ₹203.35 on February 5 and has come off sharply from there. It has tumbled over 7 per cent from the recent high and is currently trading at ₹188 per kg.

A cluster of key supports are in the band between ₹187 and ₹185 which may halt the corrective fall. An upward reversal from this support zone will see the contract trending higher towards ₹190 and ₹195. A further rally above ₹195 will then increase the likelihood of the contract revisiting the resistance level of ₹203.

On the other hand, if the MCX-Zinc futures contract breaks decisively below ₹185, the downside pressure will increase. In such a scenario, the possibility of the contract tumbling towards ₹175 and ₹170 cannot be ruled out.

Such a fall will keep the broader ₹165-205 sideways range intact. The contract has been trading in the broad sideways range since June 2018.

Medium-term traders who have taken long positions at ₹195 and ₹193 can hold them. Retain the stop-loss at ₹183 for the target of ₹212. Revise the stop-loss higher to ₹202 as soon as the contract moves up to ₹208.

Global trend

The Zinc (three-month forward) contract on the LME has failed to get strong follow through buyers above $2,800. The contract made a high of $2,810 on February 5 and has come off sharply from there. It has tumbled about 6 per cent from this high and is currently trading at $2,644.

Resistance is in the $2,660-2,675 region. As long as the contract trades below this resistance, there is a strong likelihood of it extending its down-move towards $2,600 and $2,570.

(Note: The recommendations are based on technical analysis and there is a risk of loss in trading.)

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