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The continuous zinc contract on the Multi Commodity Exchange (MCX) bounced off the crucial support band of ₹300-310 last week and is currently trading around ₹327.
Since the major trend remains bullish, and the contract rebounded from its support level, we forecast an uptick in price movement in the upcoming sessions. Indicators like the RSI and the MACD have remained bullish over the past week. Along with the price rally, the cumulative open interest (OI) of all active zinc futures on the MCX have increased to 4,459 contracts as of Monday from 3,772 a week ago. The price rise along with increasing OI is a bullish signal.
The contract is expected to reach ₹350, a resistance level, in a month. A breach of this can lift the contract to ₹375. On the downside, ₹320 can act as minor support. Below this is the support band of ₹300-310.
We recommended buying at the support band of ₹300-310 a week ago with stop-loss at ₹285. Traders who had initiated longs, then, can continue to hold, but revise the stop-loss to ₹295. Others can consider going long if the price dips to ₹320. Add more longs, in case the contract retest ₹310. The stop-loss can be at ₹295. When the contract rallies to ₹350, book one-third of your holdings and alter the stop-loss to ₹330. Liquidate the remaining when the price rallies to ₹375.
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