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.
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