Jay Puro­hit, Tech­ni­cal & De­riv­a­tives An­a­lyst, Cen­trum Broking Lim­ited

Dalal Street Investment Journal - - SPECIAL REPORT -

Base met­als bot­tomed-out in start of the cal­en­dar year 2016 and had a healthy rally till De­cem­ber 2016. But, they plunged in the fol­low­ing six months mainly due to ris­ing in­ven­to­ries and dis­ap­point­ing data from China, which is the world’s largest con­sumer of metal. How­ever, the base met­als formed a base in June 2017 and re­sumed their broader up­trend. On in­di­vid­ual met­als front, the leader amongst the metal group i.e. COP­PER has re­cently retested the ‘neck­line’ of an ‘In­verse Head & Shoul­der’ pat­tern, from which it had given break­out in Au­gust 2017 on weekly chart. The min­i­mum tar­get of the men­tioned pat­tern comes to Rs. 470 – 475 on MCX, which seems to be achiev­able in com­ing quar­ter. While, the ALU­MINIUM had a de­cent rally in last cou­ple of years with­out any sig­nif­i­cant cor­rec­tion. In Au­gust, ALU­MINIUM gave a break­out from the ‘Bullish Flag’ pat­tern on weekly chart and man­aged to sus­tain at higher lev­els. As a re­sult, it crossed the cru­cial hur­dle of 130-134 zone with an ease and closed above the same on monthly chart. At cur­rent junc­ture, there is no sign of re­ver­sals seen on chart and till the time, it holds 130-134 zone, we won’t be sur­prised to see 155-160 lev­els in com­ing months. ZINC moved within a ter­ri­tory of a ‘Ris­ing Chan­nel’ for six years from the start of cal­en­dar year 2010. In Novem­ber 2016, it gave an up­side break­out from the men­tioned pat­tern and ral­lied fur­ther. How­ever, it again retested the break­out lev­els in June 2017 and re­bounded pierc­ingly. Re­cently, ZINC crossed its pre­vi­ous high 208.40 and is trad­ing at ‘All Time High’ on MCX. Since, the mo­men­tum os­cil­la­tors and a set of mov­ing av­er­ages are placed pos­i­tively on weekly and monthly chart, the on­go­ing op­ti­mism in ZINC may con­tinue in near term too. Con­sid­er­ing the cur­rent chart struc­ture, ZINC has a po­ten­tial to rally to­wards 235 – 240 lev­els in com­ing months. The men­tioned bullish view will get negate on a close be­low its pre­vi­ous swing low of 190.70. The LEAD too had a bull run in line with its peers; but un­like the above men­tioned base met­als, it has not yet crossed its ’52 weeks high’ of 175.70 (which it formed in Novem­ber 2016). At cur­rent junc­ture, we are wit­ness­ing a for­ma­tion of a Bear­ish Har­monic Pat­tern called ‘Bear­ish AB=CD’ pat­tern on the daily chart of LEAD. The Po­ten­tial Re­ver­sal Zone (PRZ) of the men­tioned pat­tern is placed around 173 lev­els. Thus, it would be a daunt­ing task for the LEAD to sus­tain above its strong hur­dle of 173 – 176 zone in near term. On the flip­side, strong sup­port is placed at 152 and 143 lev­els.

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