Since the beginning of October, the December futures contract of zinc on MCX has made significant gains. Price rallied from about ₹180 and registered a high of ₹224.3 last week.

However, the price action for the past two weeks shows that the bulls are struggling to take the contract beyond ₹224 has it has been consolidating between ₹215 and ₹224. Hence, even though the trend is bullish, the next swing in price will remain uncertain until the contract continues to trade within the above mentioned price band.

Notably, the contract, currently trading around ₹215, is also testing the 21-day moving average (DMA) support which coincides at this price point. A breach of this level can alter the course in the short-term where the price could moderate towards the support at ₹210. A break below this level can intensify the sell-off, potentially dragging the contract to ₹200, a crucial base.

The bearish bias is supported by the moving average convergence divergence indicator on the daily chart i.e. even as it lies in the positive territory, the trajectory has turned downwards. Also, the daily relative strength index has been on a decline after hitting the over-bought territory before a couple of weeks.

Though the above factors indicate that the contract can witness deeper correction, it has a considerable support at ₹215. So, traders can sell MCX-Zinc futures with stop-loss at ₹224 for a target of ₹200 if it breaches the support at ₹215.

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