The zinc futures on the Multi Commodity Exchange (MCX) have been rallying since this year began. It rebounded from the support at ₹266 and traded around ₹286. Note that the price band of ₹286-292 is a strong barrier for the contract and a rally beyond this level is less likely to happen.
We expect the contract to at least witness a corrective decline, possibly to ₹266. The price region of ₹266-262 is a good support. If the contract falls below ₹262, we might see a quick fall to ₹250.
Also read: Today’s Nifty Prediction – January 17, 2023: Stay out of the market
However, if the contract breaks out of the ₹292, it will turn the outlook positive as the price could rise to ₹325, a resistance level. A breach of this will open the door for a rally to ₹340.
Since the contract is hovering around a barrier and the risk-reward ratio favors short positions, we recommend traders prefer going shorts.
Last week, we suggested selling at an average price of around ₹283 with a stop-loss at ₹294. Traders can retain the shorts. One can also consider fresh shorts with stop-loss at ₹294.
Going forward, when the contract slips below ₹272, modify the stop-loss downwards to ₹280. Exit all the shorts at ₹266 as the contract might rebound from anywhere within the price band of ₹262-266.