The continuous futures of zinc on the MCX (Multi Commodity Exchange) closed at ₹332.8 on Monday, down about 13 per cent from the recent high of ₹383.4 made in mid-April. Notably, it hit an intraday low of ₹323 yesterday.

While we cannot reject the possibility of a further decline from the current levels, there is a good chance that the contract will see a corrective rally, possibly towards ₹360 in a couple of weeks, before breaking below ₹310.

This can happen on the back of support at ₹320. Also, around this price level, the rising trendline meets the 50 per cent Fibonacci retracement of the prior rally, which occurred between November last year and April this year, making it a significant support. So, there is a likelihood of the contract revisiting ₹360 levels and then falling, if more is left on the downside.

Traders can risk going long in MCX zinc futures at the current level of ₹332. Consider adding longs if the price dips to ₹320 so that the average buy price is around ₹326. Keep stop-loss at ₹310 and exit the longs when the price rallies to ₹360. But note that this is a short-term trade recommendation. For further trades, the reaction of the contract to ₹360 should be closely monitored. Participants with a low risk appetite can stay away from executing this trade. Note that a decisive break below ₹310 can drag the contract swiftly to ₹294, and possibly to ₹280.

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