The Zinc futures contract on the Multi Commodity Exchange (MCX) has risen sharply higher in the past week. The contract has surged 5 per cent from ₹171 per kg to the current levels of ₹179.5. The strong rally in the past week has taken the contract well above the key near-term resistance level of ₹175.

The contract will come under pressure again only if it declines below ₹175. A break below ₹175 can take the contract lower to ₹170 or even to ₹165 again. In such a scenario, a range-bound move between ₹165 and ₹175 can be seen for some time.

However, the price action on the chart leaves the bias positive. The near-term outlook will remain bullish as long as the contract sustains above ₹175. A rise to test the resistance at ₹182 is likely in the near term. A strong break above this hurdle will then increase the likelihood of the contract targeting ₹187 or ₹188 over the short term.

Such a rally to ₹187 and ₹188 will also ease the downside pressure. It will also be an initial sign indicating that the downtrend that has been in place since February is getting reversed. As such, the price action in the coming weeks will need a close watch to get a cue on whether the downtrend in zinc has bottomed or not.

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

Related Topics