Zinc futures on the Multi Commodity Exchange (MCX) made a daily close below the support at ₹250 on Monday. As they have been falling over the past three weeks, the breach of the support can add further downward pressure on the contract.
As it stands, the likelihood for the downswing to extend appears high. The nearest notable support that the zinc August futures can find is at ₹230. Subsequent support is at ₹220.
That said, if the contract rebounds from the current level, it ought to get past the immediate hurdle at ₹256 to gain some traction. Until then, the inclination will remain bearish. In case the contract gets past ₹256, it can rise to ₹272, a strong barrier.
Trading strategy
Short zinc futures (August expiry) at the current level of ₹246; add shorts if the price inches up to ₹252. Place stop-loss at ₹256. When the contract falls to ₹235, tighten the stop-loss to ₹242. Book profits at ₹230.