The July futures contract of Zinc on Multi Commodity Exchange (MCX) has been moving sideways in a narrow band between ₹171.5 and ₹177.5 over the past two weeks. On Thursday, the contract advanced 1.6 per cent and was trading at ₹175 levels. Medium-term trend is up for the contract. An emphatic break above ₹177.5 will strengthen the uptrend and take the contract northwards to ₹180 which is a vital barrier. A conclusive break above this level will underpin the bullish momentum and will pave way for an up-move to ₹185 and then to ₹190 over the medium term.

The daily relative strength index is re-entered the bullish zone from the neutral region and the weekly RSI is likely to enter the bullish zone. Besides, the daily and the weekly price rate of change indicator are hovering in the positive terrain implying buying interest. Failure to move beyond ₹180 can keep the contract consolidating in a wide band between ₹171.5 and ₹180 for a while. Conversely, if the contract plummets below ₹171.5 can bring back selling interest and pull the contract down to ₹166 and then to ₹160 over the short term.

On the global front, the three-month rolling forward contract of zinc on London Metal Exchange (LME) has been charting upwards since early July. It is currently tests a key resistance at $2,200 with an upward bias. A conclusive move beyond this barrier will strengthen the uptrend and take the contract higher to $2,250. Key supports at $2,170 and $2,150.

Trade strategy:

The zinc contract on MCX has been trending upward since early July and near term outlook will remain positive as long as the contract trades above ₹171.5. Hence, traders can initiate fresh long positions in MCX-Zinc on dips with stop-loss at ₹170.

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