Zinc is currently trading at 112.25 after hitting intraday low of 110.95. Counter had been moving in a nice down trend and formed a descending trend line breakout on October 9, 2015. Now this metal is fluctuating near its 30 days SMA that stands near 111.90 zones. Prices are getting support near 110.60 which is low placed during the month of August this year. A potential inverse head and shoulder reversal pattern can be seen clearly on daily chart. According to this pattern reversal will confirm above neckline breakout that stands near 123. Recovery from today’s low of 110.95 indicates buying interest in this metal. MACD is making higher top if compared with prices and suggests a hidden divergence. However, MACD has formed a bearish cross near center line but lack of follow through selling suggests a strong support near 111-110 zones. Price has stuck in a range and volume has shrunk that indicates low participation. Respect of 109 zones will result in a rally towards 122 and then 129 zones. Stability below 109 will invalidate this setup and then we will see this metal heading towards 105 zones.
Recommendation: Buying zinc between 112-111 with stop loss of 109 for targeting 121-127 and more upside might be appropriate in short term.
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