By taking support at ₹250, the continuous futures contract of zinc on the Multi Commodity Exchange (MCX) rebounded in early November. It currently trades around ₹276, above both the 20- and 50-day moving averages. This gives the contract a positive bias.
Supporting the case for the bulls, zinc futures on the MCX has witnessed a long build-up of late. That is, between November 4 and 15, the November expiry futures rallied from ₹265.2 to ₹275.7 and parallelly, the cumulative open interest went up from 2,743 to 3,621 contracts. A price rally accompanied by an increase in the open interest denotes long build-up. Therefore, there is good likelihood of the contract producing a further rally from.
However, traders should be wary of impending resistance in the ₹290-292 price band. Also, from the current level of ₹276, there is support at ₹272. Therefore, given the prevailing chart set-up, it is better to look for short-term long trades from here. Also, the risk-reward ratio is better for longs.
Buy MCX-Zinc futures at the current level of ₹276 and place stop-loss at ₹270. Book profits when the contract touches ₹290.
The above suggested trade is a short-term trade. Positional trades can be considered based on how zinc futures react to the resistance band of ₹290-292.