Zinc futures: Hold the longs

Zinc futures has gained so far this week as it rebounded from an important support. While the broader trend is bullish, the price action has started showing some weakness in the uptrend.

The October futures bounced off the support at ₹408 early this week. Subsequent support is at ₹400.

On Thursday though, it rose to hit a high of ₹429.85 before moderating to the current level of ₹418. That said, the trend has not turned bearish. As long as the support at ₹400 holds, the bulls will have an edge.

Hence, there is a good chance for zinc futures to resume the rally, surpass ₹430 and touch ₹435. Resistance above ₹435 is at ₹440.

On the other hand, if zinc futures falls from the current level and breaches the support at ₹400, it can turn the outlook weak. This can potentially trigger a fall to ₹385.

Last week, we suggested buying zinc (Oct) futures at ₹410. Hold on to the trade. Retain stop-loss at ₹395. When the contract rises to ₹430, tighten the stop-loss to ₹420. Book profits at ₹435.

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