Since the beginning of September, the October futures of zinc on Multi Commodity Exchange (MCX) has been witnessing a zig-zag price pattern i.e., the contract has not been trending and was largely held between ₹185 and ₹200.
Last week, the contract — after registering a low of ₹181.2 — began to rally and touched a high of ₹198.7 on Monday. Since the price level of ₹200 is a resistance, the contract has been moderating for the past few trading sessions. It is currently hovering around the 21-day moving average. Considering the recent price action, the contract is likely to decline going forward.
Because of lack of trend, the relative strength index and the moving average convergence divergence indicators in the daily chart are in their respective neutral region.
From the current level, the nearest support can be spotted at ₹187. A breach of this level can drag the contract to ₹180. A break below ₹180 can turn the medium-term outlook negative for the contract.
Given the above factors, traders can sell the contract on rallies with stop-loss at ₹200.