The continuous contract of zinc on the Multi Commodity Exchange (MCX) saw its volatility rise during the early part of this year.
While the price dropped in January from ₹215, the contract took support at the psychological level of ₹200. On the back of this, the contract rebounded and headed northwards.
However, after reaching ₹240, the futures made a U-turn and then started to decline. However, this time, the contract found support at ₹212 i.e., it formed a higher base.
Following this, there was a recovery wherein the contract appreciated. Yet, towards the end of April, it started to lose momentum and in early May, the futures entered a consolidation phase. That is, between May and the final week of July, the contract oscillated between ₹228 and ₹243.
Although it breached the upper limit of the range towards the end of July, the contract was unable to extend the rally and once gain started to consolidate. It was largely held within ₹239 and ₹250. But last week, it broke out of this range, a bullish signal.
Supporting the bullish argument, the relative strength index (RSI) remains in the positive territory and the moving average convergence divergence (MACD) continues to chart upward trajectory.
Even though the price has seen a marginal drop in the last two sessions, one can be bullish as long as the price lies above ₹250. Traders can buy zinc futures with stop-loss at ₹246 with ₹260 as potential target.
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