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The Zinc contract on the Multi Commodity Exchange (MCX) has been on an uptrend since early October 2020 low of ₹181. The contract recorded a high at ₹225 in late November and started to move sideways in the band between ₹213 and ₹225 since then.
Last week, it encountered resistance at the upper boundary and began to decline. On Tuesday, the stock has slumped 2.8 per cent breaching the 21-day moving average and traded at around ₹217. The near-term outlook is negatively biased and the contract can extend the downmove to test the lower boundary at ₹213 in the ensuing trading sessions. Even though the medium term trend is up for the contract, it needs to break above ₹225 to strengthen the uptrend and take it higher to ₹230 initially and then to ₹235 over the medium term.
The daily relative strength index features in the neutral region and continues to chart downwards. Besides, the weekly RSI is on the brink of entering the neutral region from the bullish zone. A conclusive fall below the lower boundary at ₹213 in the coming weeks can lead to a short term trend reversal and the outlook will turn bearish thereafter.
Key supports below ₹213 are at ₹208 and ₹205. As the contract weakens from the upper boundary, traders can go short with a stop-loss at ₹222 and book partial profits at ₹213.
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