Technical Analysis

MCX-Zinc may be gearing up for a fresh rally

Gurumurthy K BL Research Bureau | Updated on March 26, 2019 Published on March 26, 2019

The Zinc futures contract on the Multi Commodity Exchange (MCX) has been struggling to breach the psychological level of ₹200 per kg. The contract has tested this resistance several times over the last one month. It is currently hovering just below this psychological hurdle at ₹199 per kg.

On the charts, the price action leaves the bias bullish. It leaves the possibility high of the contract breaking above ₹200 in the coming days. Such a break can take the MCX-Zinc contract initially higher to ₹202 or ₹203. A further break above ₹203 will then increase the likelihood of the contract moving higher to ₹208 and ₹209 over the short-term. Such a rally will strengthen the medium-term bullish outlook. In such a scenario, there is a strong likelihood of the contract targeting ₹215 and ₹217 levels over the medium-term.

Trading strategy

Traders with a medium-term perspective can make use of dips to go long at ₹195 and ₹193. Stop-loss can be placed at ₹187 for the target of ₹213. Revise the stop-loss higher to ₹195 as soon as the contract moves up to ₹201.

Global trend

The Zinc (three-month rolling forward) contract on the London Metal Exchange (LME) has been oscillating between $2,750 and $2,900 a tonne. Within this range, it is currently trading at $2,832.

Key supports are at $2,780 and $2,760. As long as the contract trades above these supports, the outlook will remain positive. There is a strong likelihood of the contract breaking above $2,900 in the coming days. Such a break can take it to $2,960.

The bullish outlook will get negated if the LME-Zinc contract declines decisively below $2,760. In such a scenario, a fall to $2,700 is possible.

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

Read the rest of this article by Signing up for Portfolio.It's completely free!

What You'll Get

This article is closed for comments.
Please Email the Editor