Zinc futures on the Multi Commodity Exchange (MCX) has been steadily falling for nearly two weeks. It is now hovering around an important level of ₹250. The chart for July expiry futures shows that the price band of ₹247-250 is a support band.
If the bears can drag the contract below ₹247, if can extend the downswing to ₹230, a support. Subsequent support is at ₹220.
But if zinc futures rebound from the current level, it can face resistance at ₹260. The 50 per cent Fibonacci retracement of the downtrend lies at ₹260, making it a considerable barrier. A breakout of this hurdle can lift the contract to ₹273.
As it stands, the trend is bearish, but zinc futures is now at a support and is yet to show signs of a recovery.
Trade strategy
On the back of the support region of ₹247-250, traders can risk going long at ₹250, with a tight stop-loss at ₹245. Book profits at ₹260.
If the stop-loss of the above long position is hit, it is likely that the support at ₹247 is breached and further decline can happen. In this case, you can initiate fresh shorts with a stop-loss at ₹255. Exit the shorts at ₹230.