Zinc Seen Climbing in Rebound From Average: Technical Analysis

Zinc is set to rise in the next few weeks, climbing from a moving average that supports the price of the metal used to rust-proof steel, according to technical analysis by Commerzbank AG.

Zinc has rebounded since selling off this month to the 200-day moving average at about $1,945 a metric ton, Karen Jones, London-based head of foreign-exchange, fixed-income and commodities technical analysis at the bank, said Jan. 23 in a report. She singled out resistance levels at $2,119, followed by $2,187, which the metal touched on Jan. 3.

“This support is further reinforced by the 55-week moving average at $1,974 a ton,” Jones said Jan. 25 by e-mail. “While these two moving averages underpin the price, an upside bias is maintained.”

Zinc for delivery in three months traded at $2,079.50 a ton at 6:21 a.m. on the London Metal Exchange. The metal has erased gains this year, the only one of the six main metals traded on the LME that isn’t higher this year.

“Commodity markets have a tendency to mean-revert to their 55-week and 200-day moving averages,” Jones said. “A test of and recovery from the 55-week moving average is key, as it suggests a positive development on the chart.”

In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index. A moving average displays the average value of a security’s price over a period of time. Resistance denotes levels where buy and sell orders are clustered.

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