The price of zinc has been declining for the last two months. The continuous futures contract of zinc on the Multi Commodity Exchange (MCX) started to fall after facing the resistance at ₹300. The contract is currently hovering around ₹258.
Despite a bearish trend, there contract has a strong base around ₹250. Of late, there is a considerable drop in the selling momentum and the zinc futures has been moving sideways.
The bulls are likely to capitalise on the support at ₹250 and push the prices upward in the coming weeks. The contract might appreciate to ₹278 in the near-term. A breakout of this level can lift the price to ₹300.
On the other hand, if the zinc futures break below the support at ₹250, the trend will turn bearish where we might see a decline to ₹242, a notable support. Subsequent support is at ₹225.
Trade strategy
Three weeks ago, we had recommended traders to go long at ₹260 with an initial stop-loss at ₹245. Retain this trade.
When the contract recovers from the current level and rises above the minor hurdle at ₹278, revise the stop-loss up to ₹270. Further tighten the stop-loss to ₹278, when the price rises above ₹286. Book profits at ₹295.