Technical Analysis

MCX-Zinc set to advance further

Akhil Nallamuthu BL Research Bureau | Updated on April 16, 2020 Published on April 16, 2020

The April futures contract of Zinc mini on the MCX had been in a downtrend since the beginning of the year. It had lost about 30 per cent when it registered a low of ₹125.8 during the third week of last month. But after that, the contract recovered and started to consolidate around ₹145. On Thursday, the contract breached the key resistance level of ₹150 and is above 21-DMA. This opens the door for further strengthening.

The daily RSI, though below the midpoint level of 50, has been rising along the contract price after showing a bullish divergence — an indication of bullish reversal. The MACD indicator on the daily chart has been signalling good upward momentum since the first week of this month.

As the contract has broken out of the resistance at ₹150, it will most likely witness a substantial rally. The immediate hindrance will be the price band between ₹158 and ₹160. Subsequent resistance can be spotted at ₹164. On the other hand, if the contract declines because of renewed selling pressure, it might retest ₹140. A break below that level can drag the contract to its prior low at ₹125.8.

On the global front, the three-month rolling forward contract of zinc on the LME remains above $1,900 and as long as the price stays above that level, the near-term trend can be bullish. A break out of $2,000 can potentially turn the medium-term trend bullish. As price of the metal rises in the global market, it can positively can lift the price on the MCX as well.

Trading strategy

The price action of futures on the MCX indicates a bullish bias and a daily close above ₹150 increases the chance of rally from current levels. Also, globally the price of the metal could advance as hinted by the LME contract. Hence, traders can buy the contract on declines with stop-loss at ₹140.

(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)

Published on April 16, 2020

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.