Technical Analysis

Zinc futures: Go long with stop loss at ₹260

Akhil Nallamuthu | Updated on: Dec 20, 2021

Zinc material,raw | Photo Credit: bagi1998

In the near term, the upside potential is at ₹300.

BL Research Bureau

The continuous contract of zinc futures on the Multi Commodity Exchange (MCX) witnessed its last leg of downtrend between mid-October and mid-November. During this one month, the futures price declined from the high of ₹326.8 to ₹260. But then, the contract started to chart a sideways trend wherein it was mainly moving within the range of ₹267 and ₹280.

The contract broke out of the resistance at ₹280 and both 21- and 50-day moving average last week, hinting at a positive bias. The daily chart’s relative strength index (RSI) and the moving average convergence divergence (MACD) are now in the positive territory. Thus, going forward, the likelihood of a rally from the current levels look high. Yet, the contract might soften to ₹270 before extending the rally.

Bullish trend

It is worth noting that the overall market has been under pressure of late, and thus, the price action needs to be closely watched, and the recent positive bias has to be taken with a pinch of salt. Therefore, traders are advised to execute only short-term trades given the current circumstances.

Considering the above factors, traders can go long on MCX zinc futures at the current level and accumulate if the price moderates to ₹270. Place stop-loss at ₹260. On the upside, the contract could touch ₹290 and possibly ₹300 in the near term. So, exit 50 per cent of the longs at ₹290. Then, revise the stop-loss to ₹278 and liquidate the remaining at ₹300.

Published on December 20, 2021
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