The November futures contract of Zinc on the Multi Commodity Exchange of India, broke out of the resistance at ₹190 this week and marked an intra-week high of ₹191.2. Currently, it is trading above both 21- and 50-DMAs, providing a positive bias for the commodity. But the contract price has softened from ₹190 and slid to ₹188, where the 50-DMA support is poised. Thus, the moderation in price seems to be a minor correction within an uptrend. The daily relative strength index is above the midpoint level of 50 and the moving average convergence divergence indicator is in positive territory showing bullish bias. Hence, the outlook remains positive and the futures price can be expected to take off from the current levels.

On the upside, the contract will face resistance in the band between ₹192.2 and ₹192.7 — the 50 per cent Fibonacci retracement level of the previous bear trend. Beyond that level, the contract has the potential to appreciate towards ₹200 over the medium term. On the other hand, if the price declines, the immediate support is at ₹186.7, with ₹183.7 as the support below it.

The price of the three-month rolling forward contract of Zinc on the LME is in an upward momentum. It has breached a strong resistance band between $2,483 and $2,500 and is trading at $2,530. The likelihood of further appreciation is high which could take the contract price to $2,574 — the 50 per cent Fibonacci retracement level of the previous downtrend — in the coming days. Above that level, it will face a hurdle at $2,664. However, a decline from the current level will, most probably, be arrested by the key support at $2,500.

Global prices of the commodity continue to rise. This is expected to have a positive impact on the price of MCX-Zinc as well. So, moderation in the futures price in the domestic market can be an opportunity to go long. Hence, traders are advised to initiate long positions with stop-loss at ₹183.