Zinc prices are on a strong rise since April. Within this uptrend the price has been consolidating over the past week. The zinc futures contract on the Multi Commodity Exchange (MCX) surged to a high of ₹279.80 per kg last week. It has fallen since and hovering above ₹270. The contract is currently trading at ₹274 per kg.
Outlook
The overall uptrend is intact in the MCX zinc futures contract. There is currently a pause within the broader uptrend. Immediate support is at ₹271. Below that ₹268-₹267 is the next strong support zone. We expect the downside to be limited to ₹267 if the contract falls below ₹267. MCX zinc contract can rise to ₹285-286 in a week or two.
The 21-day moving average support at ₹264 is crucial. If the contract breaks below this support then there could be a steep fall to ₹255.
Trade strategy
Traders can go long now at ₹274. Accumulate on dips at ₹272 and also at ₹269. Keep a stop-loss at ₹266 initially. Trail the stop-loss up to ₹276 as soon as the contract moves up to ₹279. Move the stop-loss further up to ₹280 when the price touches ₹283. Exit the longs at ₹285.