MCX-Zinc retains its bullish bias

The June futures contract of Zinc on the Multi Commodity Exchange (MCX) has been moving in a tight range for the past few trading sessions. Nonetheless, the contract has been in an uptrend since the past three months and the price is well above the 21-day moving average (DMA). On the daily chart, the contract is forming higher highs and higher lows, indicating a good bullish momentum.

Since the trend is bullish,the moving average convergence divergence (MACD) indicator on the daily chart is in an upward trajectory and remains in the positive territory. However, the daily relative strength index (RSI), though ruling above the midpoint level of 50, has been flat. This can be an indication of bulls losing traction. But the trend can incline towards bullishness as long as the price stays above ₹160.

If the contract regains upward momentum and rises, it is likely to face a hurdle at ₹170. A breakout of that level can take the contract to ₹175. On the other hand, if the contract is unable to sustain above ₹160 and breaches that level, the price area between ₹153 and ₹155 can be a substantial support band. The level of ₹155 coincides with the 50-DMA, making it a strong support. A break below the support band can result in a considerable sell-off.

On the global front, the three-month rolling forward contract of zinc on the London Metal Exchange (LME) has been trading flat in the past few sessions. But the price now rules above the important level of $2,000, and as long as it stays there, there is high likelihood of a further rally.

Even as the contract on the MCX and the LME have been charting a sideways trend for the past few days, both the contracts remain above their respective support levels. Hence, traders can be positive and make use of declines to initiate fresh long positions on MCX-Zinc with stop-loss at ₹153.

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