The March futures contract of Zinc mini on the Multi Commodity Exchange of India (MCX) has been consolidating in the band between ₹151 and ₹158 for the past few trading sessions. With the current sideways trend, the downward trend that has been place, appears to have been arrested, at least temporarily.

While the sideways trend per se cannot be taken as confirmation for a bullish reversal, it has opened the door for such a possibility, given that there are certain substantiating indications shown by the oscillators such as RSI and MACD.

The daily RSI is hinting at a shift in momentum in favour of the bulls, as it is taking an upward trajectory in the past few trading sessions. The MACD indicator on the daily chart shows the downtrend is considerably losing its momentum.

Assuming the contract breaks out of ₹158, it can rally to ₹168 in subsequent sessions. If the contract manages to breach that level, it might possibly rally to ₹175. On the other hand, if the bears regain traction and the price breaks below ₹151, it can decline to ₹143 and 140.

In the past week, the three-month rolling forward contract of Zinc on the London Metal Exchange (LME) was fluctuating in a sideways trend, but with a bearish bias. Notably, the major trend remains on the downside and the price has slipped below $2,000. Last Friday, it even registered a fresh four-year low of $1,970. These factors increases the possibility of further weakening.

Trading strategy

While there are indications of a potential recovery in MCX-Zinc, the global trend remains bearish as indicated by the LME contract. Traders can wait for the price on the MCX to breach either ₹151 or ₹158 before taking fresh positions. While ₹143 is the support below ₹151, the resistance above ₹158 can be spotted at ₹168.

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