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Published on 17/04/2018 11:24:17 AM | Source: GEPLCapital Ltd

Zinc Trend to remain on the bearish side till 217 is not broken on the upside - GEPL

Posted in Commodities Reports| #GEPLCapital Ltd #Commodity Tips

MCX Zinc

Observations:

* A strong bull run is depicted on the above zinc chart. Since June 2017 prices are been trading in higher highs higher lows pattern. In January and February 2018 prices made consecutive higher highs (229.85 and 232.70) but on the other hand indicators are making lower highs thus indicating divergence and made a double top formation with the neck line place at 216. After breaking below the neck line prices made a low of 207.75 but soon lost the steam and prices where trading in a range 207.40 and 216.15. On Thursday morning session prices gapped down below the range making a low of 201.65 and closed below the 200 day SMA (206.18).

* After denoting negative divergence indicator are making lower lows and lower highs. ADX (24) and –DMI > +DMI is indicating is trend to remain on bearish side. RSI failing to break above the resistance and now heading down indicating decrease in the intrinsic strength. MACD trading below the zero line and failing to break above the zero line indicating momentum on the bearish side.

Inference:

* Trend to remain on the bearish side till 217 is not broken on the upside. Strong support is placed at 198 and prices testing the support cannot be ruled out. Break below 198 would open 196 and 195 levels on the down side and would confirm the trend change i.e. halt in the higher highs higher lows formation. Till the time prices did not break above 217 sell on pullback is a good strategy to bet.

MCX Lead

Observations:

* Lead has been the underperformer from the base mental pack. Since October 2017 till February 2018 prices were trading in the range 155.05 and 172.50. Higher highs made in October 2017(171.10) and February 2018 (172.50) diverge with the indicators. Prices have failed to break above 172.50 hence failing to make higher highs after indicating the divergence. After breaking below the consolidation prices made a low of 150.65 and again went into a consolidation mode trading between 150.65 and 158.95. In the Fridays trading session prices break below the range making a low of 149.80 and closed below the 50 day SMA (154.05).

* The trend indicator ADX (18) is indicating prices might continue it range bound movement. A Range sift can be notice in RSI which indicate decrease in the intrinsic strength, there is positive divergence indicated in RSI indicating a short throwback. MACD after a board consolidation break below the zero line and since then failed to break above it which indicates momentum to remain on the negative side.

Inference:

* Trend to remain bearish till 159 is not broken on the upside and next support now is placed at 147. If prices sustain below 150.65 we might see prices testing 147 levels on the downside further break below 147 would open 145 and 144 levels on the downside. A throwback till 156 levels cannot be ruled out. Sell on throwback till 159 is not broken on the up is recommended.

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