The Zinc futures contract on the Multi Commodity Exchange (MCX) has tumbled 5 per cent over the last one week. It is currently trading at ₹160.45 a kg. Though there is some support near current levels at ₹160, the contract is likely to break this level and decline to ₹157. A significant trend-line support is poised at around ₹157 which can halt the current fall. The downside pressure will ease if the contract manages to reverse higher from ₹157. In such a scenario, a bounce back move to ₹160 is possible. Further break above ₹160 will see the up move extending to ₹165 or even ₹170 levels thereafter. Short-term traders with high-risk appetite can go long on an upward reversal from ₹157. Stop-loss can be placed at ₹155 for the target of ₹161. Revise the stop-loss higher to ₹158.5 as soon as the contract moves up to ₹160.
On the other hand, if the MCX-Zinc futures contract breaks below the trend-line support at ₹157, it will come under more pressure. Such a break can drag the contract lower to ₹150 – the 50 per cent Fibonacci retracement support or even₹148 – the 21-month moving average level in the short term.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading
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