Zinc May Rise to 17-Month High, FCStone Says: Technical Analysis

Zinc may rise to the highest since September 2011 if prices are able to break out of a so-called double-top formation, according to technical analysis by INTL FCStone Inc.

The attached chart shows the pattern, comprising the Jan. 3 high of $2,187.25 a metric ton and yesterday’s one-year peak of $2,190. While a double-top formation is usually a bearish indicator, if prices close above the Jan. 3 high for at least two days, it would break the trend, said Edward Meir, an analyst at INTL FCStone in New York.

“There does seem to be a double-top formation on the charts at $2,187, but if prices manage to clear it, we could have a breakout on our hands,” Meir said in a report yesterday. Prices may climb to $2,280 by the end of the month, he said.

A double top consists of two well-defined peaks with a moderate valley in between.

Zinc for delivery in three months climbed 0.4 percent yesterday to $2,185 on the LME. Prices rose 3.1 percent in January, a third straight gain, as global inventories declined. The metal is used in stainless steel.

“Supplies are tightening up a bit, and metals in general are holding up pretty well,” Meir said in a telephone interview.

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.

To contact the reporter on this story: Joe Richter in New York at jrichter1@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.