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The zinc futures contract on the Multi Commodity Exchange of India (MCX) has been in a long-term uptrend since this March low of ₹131.9.
Following a range-bound movement in the band between ₹230 and ₹242 during early May and mid-June this year, the contract took support at ₹230 and continued to trend upwards. Since then, it has been in a medium-term uptrend. But, the contract had met with a resistance at ₹252 in early August and was on a corrective decline until last week.
Significant support at ₹242 and the 50-day moving average had provided base for the contract. Subsequently, the contract began to trend upwards and it climbed about 0.6 per cent to trade at around ₹247.8 on Tuesday. This rally has breached the 21-day moving average, showing initial sign of bullishness. The daily relative strength index is charting higher in the neutral region and the weekly RSI continues to feature in the bullish zone. Although there is evident of bullish momentum, but the contract faces a key barrier ahead at ₹250.
A conclusive breakthrough of this level is needed to strengthen the uptrend and take the contract higher to ₹260 and then to ₹270 over the short term. Failure to move beyond the resistance level of ₹250 will keep the contract in a sideways band between ₹242 and ₹250 for a while.
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