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The zinc future on the Multi Commodity Exchange (MCX), which has been on a downtrend for the past couple of weeks, seems to have found a base. That is, the contract started falling after facing resistance at around ₹300. But over the past couple of weeks, it has been trading above ₹264-266 price band, which is offering good support.
However, from the current level of ₹273, there is a barrier at ₹278. The contract should breach this level to turn the short-term trend bullish. In such a case, it can rally towards ₹290 and then possibly to ₹300. A breakout of ₹300 can turn the medium-term outlook positive.
On the other hand, if the contract slips below ₹264, the bears can drag the contract to ₹250.
Nevertheless, the price action shows a good support between ₹264 and ₹266. Besides, the RSI and the MACD on the daily chart are showing signs of recovery. Therefore, one can consider fresh longs.
Trade strategy
Even though there are positive signs, the zinc futures has a resistance at ₹278. Hence, traders can wait for now and buy if the barrier at ₹278 is invalidated. Place stop-loss at ₹270. When the contract touches ₹290, tighten the stop-loss to ₹282. Exit the longs at ₹295.
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