After fluctuating in a narrow range over the past week, the December futures of zinc on the Multi Commodity Exchange (MCX) bounced off the support at ₹260. The contract is currently testing the 50-day moving average (DMA) at ₹271.
The bounce on Wednesday means the contract has formed a higher low on the daily chart and has taken the price above the 20-DMA. It is also trading slightly above the 50-DMA, and the RSI and the MACD on the daily chart are showing bullish signs. Therefore, zinc futures might see a rally from here.
While ₹280 can be a minor hurdle, the contract can extend the rally to ₹290 in the short-term. So, one can consider taking short-term buy trades at the current level.
But note that a fall below ₹260 can result in the contract declining to ₹250.
Taking into account the bullish signals, we recommend initiating fresh long positions at the current level of ₹271 and add more longs if the price dips to ₹267. Place stop-loss at ₹258 at first.
When the contract crosses over ₹280, tighten the stop-loss to ₹274. Liquidate the longs at ₹290.