Zinc futures has been rising so far this week. But there are resistance levels ahead, which can cap the upside.
Broadly, zinc futures saw a decline in price between mid-December and the end of January, when the price dropped from ₹293 to ₹256.
But the contract has found support at ₹256 and recovered a little. The price action shows that zinc futures has now formed a base at ₹266, which can trigger a rally.
However, there are a couple of barriers ahead at ₹272 and ₹275. A breakout of ₹275 will confirm a higher high and will be a considerable indication of a bullish reversal in trend.
A move past ₹275 can lift zinc futures to ₹284 and ₹293, potential resistance levels.
On the other hand, if the contract drops from the current level and breaks below support at ₹266, it can drop to retest ₹256. A breach of this can drag the contract to ₹245.
Trade strategy
If zinc futures break out of the resistance at ₹275, go long with a stop-loss at ₹266. When the contract touches ₹284, tighten the stop-loss at ₹278. Book profits at ₹293.
