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Akhil Nallamuthu
The continuous futures contract of zinc on the Multi Commodity Exchange (MCX), which has been witnessing considerable amount of volatility since the beginning of 2021, has managed to stay positive as the year-to-date gain so far is a nearly 10 per cent. Considering the price action since the beginning of April, the contract has been steadily gaining and moved past a resistance at ₹230 and it has been forming higher highs consistently. Hence, the contract is likely to extend the rally.
Substantiating the bullish bias, the moving average convergence divergence indicator on the daily chart has been tracing an upward trajectory and lies in the positive territory. The daily relative strength index stays in the bullish zone and hints at fresh upward momentum being built-up. Also, the average directional index is indicating that the bulls have an upper hand over the bears and the price lies above both 21- and 50-day moving averages (DMAs).
The above factors are encouraging for the bulls. However, the price of ₹237 has been acting as a resistance, particularly over the past few trading sessions. Take this into account, traders can wait for now and initiate fresh long positions in May futures once the hurdle of ₹237 is breached. Stop-loss can be at ₹230, where the 21-DMA lies. A breakout of ₹237 can bring in more buyers eventually lifting the contract to ₹245. Above this level, it can touch the key level of ₹250.
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