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The zinc futures contract on the Multi Commodity Exchange of India (MCX) has been in an intermediate-term uptrend since this March low of ₹131.9.
Following a corrective decline in September, the contract took support at around ₹180 in early October and continued to trend upwards. Since then, it has been in a short-term uptrend and gained 2 per cent on Wednesday. It is trading at around ₹218, testing resistance at ₹220.
The contract has advanced 3.6 per cent this week so far. After ₹220, it faces a key long-term resistance ahead at ₹230.
Moreover, both the daily and the weekly relative strength indices are featuring in the overbought territory implying a near-term correction is on the cards.
Traders can take long positions on corrective decline with a fixed stop-loss at ₹210 and book profit at ₹230 levels. As long as the contract trades above the significant support level of ₹200, the short-term uptrend remains intact. Immediate support is at ₹210 and a slip below this base can pull the contract down to ₹200.
Continuation of the rally can test resistance at ₹230.
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