The March futures contract of Zinc mini on the Multi Commodity Exchange of India (MCX) has been in a consolidation phase for the past two weeks, fluctuating between ₹150 and ₹158. But the major trend remains bearish and the price stays below the 21-day moving average, giving it a bearish bias. Unless the contract gets out of the range, the next leg of trend cannot be confirmed.

While the moving average convergence divergence (MACD) indicator on the daily chart is in the negative zone, the daily Relative Strength Index (RSI) has come up marginally along the sideways trend. However, it lies below the mid-point level of 50.

On the back of the major downtrend, if the contract breaches the lower limit of the range at ₹150, it might weaken to ₹143 in subsequent trading sessions. Below that level, it can decline to ₹140. But if the contract breaches the upper limit of the range at ₹158, it might advance to ₹168. A break out of that level can potentially take the contract to ₹175.

In the past week, the three-month rolling forward contract of Zinc on the London Metal Exchange (LME) registered a fresh four-year low of $1,913 on Monday, before recouping its intra-day losses. However, the contract is largely trading between $1,970 and $2,064, according to daily chart pattern. Hence, until it breaches either of these levels, the next leg of trend cannot be confirmed. But the major trend is bearish and a break below $1,970 can drag the price to $1,900.

Trading strategy

The short-term trend is unclear as the contract of Zinc on the MCX has been moving in a sideways trend. So, does the contract on the LME. Hence, traders can wait for the price on the MCX to breach either ₹150 or ₹158 before taking fresh positions. While ₹143 is the support below ₹150, the resistance above ₹158 lies at ₹168.

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