MCX-Zinc displays bullish bias

Akhil Nallamuthu BL Research Bureau | Updated on May 21, 2020 Published on May 21, 2020

The May futures contract of zinc on the MCX has been gradually gaining since the beginning of the week. The contract, currently trading at ₹157, is testing the resistance in the band between ₹157 and ₹160. The 50 per cent Fibonacci retracement level of the previous downtrend, also at ₹160, makes it a critical level.

Considering the price action on the daily chart, it has been forming higher highs and higher lows. Also, the price has rallied past both the 21- and 50-DMAs and the 21-DMA has crossed over the 50-DMA — a bullish indication.

Corroborating the bullish bias, the daily RSI has gone above the midpoint level of 50. Moreover, the Moving Average Convergence Divergence (MACD) indicator on the daily chart is in a strong upward trajectory and has entered the positive territory.

On the back of the prevailing bullish bias, if the contract breaks out of ₹160, it can turn the medium-term trend positive. The immediate hurdle is at ₹170. A breakout of that level can lift the contract to ₹175. On the other hand, if the contract weakens it will find support at ₹150. A break below that level can drag the contract to ₹145.

On the global front, the three-month rolling forward contract of zinc on the London Metal Exchange (LME) has been exhibiting bullish bias since the beginning of the month. The contract is currently trading above the critical level of $2,000 and it has been forming higher highs and higher lows. If it can sustain above $2,000, the likelihood of a rally is more which can potentially lift the contract on the MCX as well.

Trading strategy

The respective contracts on the MCX and the LME are exhibiting bullish bias. But the MCX-Zinc contract has a substantial resistance at ₹160. So, traders can initiate fresh long positions if the contract breaks out of ₹160. Place stop-loss at ₹150.

Note: The recommendations are based on technical analysis. There is a risk of loss in trading.

Published on May 21, 2020

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!


Support Quality Journalism
  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.