The spot price of Zinc on the MCX seem to be consolidating between ₹182 and ₹185.15, following a downtrend that began in November. Similarly, the January future contract of Zinc Mini on the MCX moves in a sideways trend, even after breaking below an important support at ₹179.25.

Notably, the futures contract continue to trade below the 21-DMA, retaining the short-term bearish trend. For the contract to reverse the trend, it should close above the resistance at ₹182.85 on a daily basis. The RSI and the MACD on the daily chart does not seem to hint a definite direction.

The contract is trading near the 21-DMA resistance at ₹180.8. But as long as the contract price stays within ₹178.75 and ₹182.85, it cannot be expected to establish a clear trend. Aligning with the major trend, if the contract breaks below ₹178.75, it can decline to ₹174.8 in the near term. On the other hand, if the contract breaches ₹182.85, the immediate resistance is at ₹186.4 — the 50 per cent retracement level of the previous bear trend. This level is coincided by 50-DMA, making it a significant level.

Unlike the price of Zinc on the MCX, the three-month rolling forward contract of the metal on the LME rallied after making a low of $2,200. Following the downtrend, the contract rose to $2,350, where the recovery was capped. It is currently hovering around the support at $2,270. While further decline could drag the price to $2,200, a bounce from current level can take the contract to $2,350.

Trading strategy

As the futures contract is caught between ₹178.75 and ₹182.85, the next leg of trend can be confirmed only if it breaches either of these levels. Until then, traders are advised to stay on the sidelines.

Related Topics
comment COMMENT NOW