MCX-Zinc is range-bound

The Zinc contract on the Multi Commodity Exchange of India took support at ₹175.3 in December last year and began to trend upwards. Since then, the stock has been in a short-term uptrend. But the contract encountered a key resistance at ₹190 and began to witness a corrective down-move. It is currently trading at ₹184.5. On the downside, the contract has a key support at ₹180.

The daily relative strength index (RSI) is moving in the neutral region, without lending any clear direction. The moving average convergence divergence (MACD) on the daily chart is on the brink of entering positive territory. A strong rally above ₹190 is needed to strengthen the uptrend and take the contract northwards to ₹195 and then to ₹200 in the short- to medium-term.

Conversely, if the contract slumps below the immediate support level of ₹180 can drag it lower to ₹175 in the short-term. Therefore, traders should tread with caution as long as the contract is range-bound between ₹180 and ₹190.

The three-month rolling forward contract of Zinc on the London Metal Exchange is hovering at $2,388 and has surpassed a key resistance at $,2,350. But it faces key resistances ahead at $2,400 and $2,425 levels. A strong breakthrough of theses resistance will pave way for an up move to $2,460. Beyond $2,460, a vital resistance is at $2,500 levels. Supports for the contract are at $2,350 and $2,270.

Trading strategy

As the price Zinc on the MCX is range-bound in the band between ₹180 and ₹190, traders can take a cautious approach and avoid trading in the in MCX-Zinc until the range is breached on either side and a clear short-term trend is set.

Note: The recommendations are based on technical analysis. There is a risk of loss in trading.