The January futures contract of Zinc Mini on the Multi Commodity Exchange of India rallied in the past week and it eventually broke out of the range between ₹178.75 and ₹182.85. After advancing to ₹184.8, it softened to ₹183. The contract is retesting the resistance-turned-support level of ₹182.85 and is likely to advance henceforth. The contract has also crossed above the 21-DMA, turning the short-term outlook positive.

Adding to the bullish outlook, the daily relative strength index (RSI) is hinting at considerable strength in the rally. Notably, it has gone above the midpoint level of 50. The moving average convergence divergence (MACD) on the daily chart too is exhibiting bullish momentum.

Since the contract has broken the resistance at ₹182.85, it can be expected to build on the prevailing positive momentum and appreciate further from current levels. The nearest resistance on the upside is at ₹185.2 — the 50-day moving average. The subsequent resistance is at ₹187.5. On the other hand, if the contract weakens, it will find support at ₹180.8 — the 21-DMA. Below that level, the support is at ₹178.75.

As on the MCX, the three-month rolling forward contract of Zinc on the London Metal Exchange strengthened last week and breached the resistance at $2,350. The contract rebounded from the support at $2,270, coinciding with the 21-day moving average. The outlook of the contract has turned bullish and it can be expected to advance to $2,460 in the upcoming sessions. Above that level, it could rally to $2,555. On the downside, the contract has supports at $2,350 and $2,270.

Trading strategy

The price trend of Zinc on the MCX and LME indicates a positive outlook and hence, one can take a bullish view on the commodity. Traders can initiate fresh long positions on declines in MCX-Zinc and place stop-loss at ₹178.75.

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

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