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Price action since the beginning of September shows that the October futures of zinc in the Multi Commodity Exchange has been trading with a bearish bias. The contract has formed a lower highs and the 21-day moving average (DMA) is about to slip below the 50-DMA — an indication of a potential change in the medium-term trend.
Corroborating the downward bias, the daily relative strength index is below the midpoint level of 50 and the moving average convergence-divergence indicator in the daily chart has been charting a downward trajectory and is on the verge of entering the bearish zone.
Also, we can also observe a descending triangle pattern in the daily chart with its base at ₹186. Notably, the 38.2 per cent retracement level coincides at this price point, making it a strong support. So, even though the contract is trading with a bearish bias, the price should fall below ₹186 to establish a sustainable downtrend. Hence, traders can wait for now and sell the contract with a stop-loss at ₹192 if price breaches ₹186.
Note: The recommendations are based on technical analysis.
There is a risk of loss in trading
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