Base metal had a negative week, what next?


Base metal had a negative week. Industrial metal came under pressure after data showed Chinese CPI inflation rose less than expected in January, while producer price index inflation weakened further despite the relaxing of anti-COVID restrictions.

Aluminum prices were set for a muted week as fears of a looming recession were countered by some optimism over a demand recovery in China, the world’s largest importer of the red metal.

The weak data showed that an economic recovery in the world’s largest copper importer may take longer than expected, especially as it grapples with increasing COVID-19 cases.

Adding to this, the dollar index continued trading on the positive also weighing on a negative sentiment on metal.  Greenback rebounded more than 1.20%, since 1 Feb 2023. It has enjoyed one of the strongest bounces since it topped out in late September/early October.

Technical – ALUMINUM at crucial level, expect to break it.

On the weekly chart, since 10 Oct 2022 ALUMINUM Future is trading in between rising channel line pattern and facing resistance 50 SMA on the same time. Both are indicating a bearish momentum in near future. Adding to this, RSI 14 and its 9 SMA is also giving negative crossover.

Fresh correction will expected below 213.50 levels and aluminum future may test 209-207.50 very soon, which coincides with lower trend line of channel.

Alternatively, any rise towards 220-222 will expect to attract near future selling activities.

Overall sentiment expects to remain negative unless aluminum future give a closing above 226.50.

Technical – ZINC at crucial level, expect to break it.

Since 23 January 2023, ZINC Future turned negative. It witnessed more than 9.50% fall. Retreated from the high 304.55 and made a low 270.05 last week.

Formation of long bearish candlestick is indicating for a bearish momentum to be continued. Adding to this, ZINC Future broke its crucial support 272, coinciding with the support line of rising channel pattern which also indicates negative momentum.

Moreover, RSI 14 and 9 SMA turned negative, which also signals that ZINC Future may extend its recent bearish momentum.

This week, ZINC Future expects to test immediate support 266-262 very soon. And any rise towards 273-274 could attract selling activities in near future.

On the upside, 278.50 will act as an important resistance; traders take it as a stop loss on the short side.

Alternatively, if ZINC future breaks its massive resistance of 282.50, then only will lead positive momentum. And it will test 288-292.50