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Zinc prices have been falling over the last few weeks. The Zinc futures contract on the Multi Commodity Exchange (MCX) had come down from a high around ₹280 per kg in mid-May to make a low of ₹247 per kg last week. From there the price has recovered slightly and has closed at ₹255.35 per kg last week.
Outlook
A very crucial support is around ₹246. This has held very well last week. Resistance is around ₹262. So, broadly, ₹246-262 will be the trading range for some time now. A breakout on either side of ₹246-262 will then decide the next direction of move.
A break below ₹246 will increase the selling pressure. Such a break can drag the MCX Zinc Futures contract down to ₹234 in the coming weeks. On the other hand, a decisive break above ₹262 will indicate a trend reversal. It will turn the outlook bullish. In that case, the contract can rise to ₹268-270.
- Also read: Zinc futures: Bears tighten grip
As seen from the daily chart, the bias is negative. So, the preference will be to see a break below ₹246 and a fall to ₹234 in the coming days.
Trade strategy
Traders have to wait for the Zinc contract to breakout on either side of ₹246-262 to take a trade. Since the bias is negative, go short on a break below ₹246. Keep a stop-loss at ₹249.
Trail the stop-loss down to ₹243 as soon as the contract falls to ₹241. Move the stop-loss further down to ₹241 when the price touches ₹239. Exit the shorts at ₹238.
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