22/02/2024

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MCX-Zinc: Wait for dips to go long

MCX-Zinc: Wait for dips to go long

Table of Contents

Zinc prices have come down over the last one week. The Zinc Futures contract traded on the Multi Commodity Exchange (MCX) made a high of ₹233.85 per kg last week and declined over 4 per cent since then. It is currently trading at ₹224 per kg.

Outlook

The near-term outlook is negative. Immediate support is ₹222.50 which is holding well for now. If the Zinc contract manages to rise from the current levels, a corrective up move to ₹227 is a possibility. The region between ₹227 and ₹228 is a strong resistance now which can cap the upside. So, the contract could decline and break below ₹222.50. Such a break can take the contract down to ₹219-218 in the coming week.

From a medium-term perspective, the region around ₹218 is a very strong trend support that can halt the current fall. As such, the MCX Zinc Futures contract can see a fresh rise from around ₹218 again, opening the possibilities for the contract to reach ₹230 and ₹235 over the medium-term.

So, the preferred path of move for Zinc going forward would be to see further fall to ₹218. This fall can happen either from the current levels or after a short-lived bounce to ₹227-228. Thereafter, from around ₹218, a fresh leg of rise can target ₹230-235 on the upside.

Trading Strategy

Traders can wait for dips. Go long at ₹220 and ₹218. Keep the stop-loss at ₹215. Trail the stop-loss up to ₹222 as soon as the contract moves up to ₹224. Move the stop-loss further up to ₹225 when the contract touches ₹227. Exit the long positions at ₹228.