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Zinc futures on the Multi Commodity Exchange (MCX) surpassed the resistance at ₹225 and hit a high of ₹233 on September 29. However, the breakout did not sustain as the contract fell in the following session. Thus, the barrier at ₹225 is still true and a strong one. Until this hurdle holds, the bears will have an upper hand.
- Also Read: MCX-Zinc: Stuck in sideways range
On Tuesday, the October futures slipped below a minor support at ₹220, and this has opened the door for further depreciation. Notably, since June, the contract has largely been trading within the range of ₹210-225. Hence, it is most likely that the contract will revisit the support at ₹210.
If this is breached, the contract can see another leg of fall, probably to ₹180. On the other hand, if the contract recovers from here and sees a daily close above the price band of ₹225-230, the short-term trend could turn bullish where the zinc futures can appreciate to ₹250. Nevertheless, as it stands, the bias is bearish.
Trade strategy
Short zinc futures at the current level of ₹218 and add shorts in case the price inches up to ₹222. Place stop-loss at ₹230.
Going forward, when the contract falls below ₹215, tighten the stop-loss to ₹220. Book profits at ₹210.
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