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Zinc price has moved up well last week. The Zinc Futures contract on the Multi Commodity Exchange (MCX) rose over 3 per cent last week. The contract is currently trading at ₹221 per kg.
Outlook
The weekly chart gives a mixed outlook. However, on the daily chart, a complex inverted head and shoulder is in the making. This leaves the bias positive. The neckline resistance of this pattern is coming around ₹222.
A strong break above ₹222 will confirm the pattern breakout. Such a break will boost the bullish momentum. MCX Zinc futures contract can rise towards ₹233 in the coming weeks.
Immediate support is at ₹219. Below that ₹217 is the next key support. Any intermediate dips are likely to be limited to ₹217. The price action on the daily chart indicates that there are good chances to get fresh buyers in the markets at lower levels and limit the fall.
The bullish outlook will get negated only if the Zinc futures contract declines below ₹217. In that case, a fall to ₹212-210 can be seen. For this fall to happen, the contract has to remain below ₹222 and break ₹217. But that looks less likely.
Trade Strategy
Traders can go long on a break above ₹222. Keep a stop-loss at ₹219. Trail the stop-loss up to ₹224 as soon as the contract moves up to ₹226. Move the stop-loss further up to ₹227 when the price touches ₹229. Exit the longs at ₹231.
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