Zinc futures on the Multi Commodity Exchange (MCX), which began its latest leg of rally a month ago, has been falling over the past few sessions.
The October contract registered a high of ₹289.65 last week. It then moderated and is currently hovering around ₹278.
The chart shows that the downswing is likely to extend. The nearest support is at ₹275 where a trendline and 20-day moving average coincides. So, this can arrest the fall.
A potential rebound on the back of ₹275 can lift the contract to ₹290. A breach of this can lift the price to ₹300, a strong resistance.
On the other hand, if zinc futures breach the support at ₹275, bears can gain more strength. This can possibly lead to the contract falling to ₹265, a support. Subsequent support is at ₹252.
Trade strategy
Buy zinc futures when its price softens to ₹275. Target and stop-loss can be ₹290 and ₹268. After initiating the trade, when the contract rises to ₹285, trail the stop-loss to ₹280.