Zinc futures has been on a decline since mid-December after it found resistance at ₹293. Since then, it has been steadily forming lower lows and lower highs.
Over the past month, the contract has been moving up gradually after finding support at ₹258 in early February. However, after reaching the resistance band of ₹272-275, fresh sellers arrived.
Consequently, zinc futures has been witnessing a sharp fall in price. On Tuesday, the March expiry futures closed at ₹267.35. Since the February contract expires on February 28, we are considering the March series for analysis and trade recommendation.
We expect the price to further drop from the current level of ₹267.35 to ₹258 quickly. A breach of the support at ₹258 can lead to a fall to ₹252.
On the other hand, if the contract recovers and surpasses the barrier at ₹275, the outlook can turn positive, wherein it can appreciate to ₹285 and then to ₹293.
Nevertheless, as it stands, the trend is bearish, and the price is likely to fall further.
Trade strategy
Short zinc futures (March) at ₹268 and on a rise to ₹272. Target and stop-loss can be ₹258 and ₹277 respectively.