Zinc futures on the Multi Commodity Exchange (MCX) has been on a decline since the beginning of August. It faced resistance at ₹228 and unable to go beyond this level, it went southwards.
Extending the downside, it broke below the support at ₹213 last week and this has increased the probability of further fall. Currently trading at around ₹212, we expect the contract to decline to ₹200 in the short-term. If the contract falls below the support at ₹200, it is likely to trigger another downswing where the price could decline to ₹180.
On the other hand, if there is a recovery, the contract is likely to face resistance at ₹218, where the 20- and 50-day moving averages coincide. A breach of this level can lift the contract to ₹222.
Trade strategy
Last week, we suggested going short on zinc futures at ₹210. Retain this and add more shorts if the contract touches ₹213. Initial stop-loss can be at ₹218.
When the contract drops below ₹205, tighten the stop-loss to ₹210. Book profits at ₹200.