Global Zinc futures has traded higher in the month of May and first week of June owing to rising business and manufacturing activities in China. In addition, the Chinese factory activities had also resumed over 80% of its business activities which had also supported zinc prices in the earlier weeks. Moreover, easing situations worldwide in the second half of June onwards and easing domestic market activities in India has led to uptrend in the global zone prices.
For the month ahead, we expect global Zinc futures to trade bullish with optimistic manufacturing and non manufacturing data in China and the United States. This is expected to increase the demand in the international markets as mining work and refined metal production is expected to pick up pace. Many European countries have begun easing the lockdown situation and global experts are optimistic for the full revival of the world economy in the months ahead. This is also expected to bring long accumulation in the LME exchange with an expectancy of higher cancel warrants in the months ahead. As per ILZSG, global zinc metal production for Apr’20 is reported to have risen to 1086.1 thousand tonnes, slightly higher compared to 1083 thousand tonnes of the preceding month. In the case of metal usage of Zinc, metal usage has been reported to have increased by 2.08% to 1075.3 thousand tonnes for Apr’20, compared with 1053.3 thousand tonnes reported during Apr’20. Initial revival of production is expected to be positive for the prices as demand/usage is also forecasted improve in the reviving business activities and hence we are bullish in MCX Zinc Futures for the coming month ahed.
On the daily chart, MCX Zinc (July) has witnessed support near its "Upward Sloping Trend Line” which suggests control in the hands of the bulls. Also, price has sustained above the “Ichimoku Cloud” which confirms strength in the counter. Additionally, price has closed above its 20*50 SMAs which indicates bullish influence. Furthermore, momentum indicator RSI (14) has sustained above its 50 level which signals bullishness. Moreover, momentum indicator Stochastic (6) has shown a positive crossover which confirms positive momentum. So, based on the above technical structure one can initiate a long position in MCX Zinc (July) future at CMP 163.70 or a fall in the prices till 163 levels can be used as a buying opportunity for the upside target of 171. However, the bullish view will be negated if MCX Zinc (july) closes beloww the support of 160.
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