Jay Purohit, Technical & Derivatives Analyst, Centrum Broking Limited
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.