Trading strategies for copper and zinc by Tradebulls Securities

Exhaustion is being witnessed in Copper as on daily scale, there has been an emergence of 'Bearish Engulfing' candlestick pattern

Gold

Gold prices is trading around $1,800; the US Fed’s testimony did not affect gold prices. The testimony was along the expected line. Gold needs to break above 47,000 in MCX for bulls to gain some control. In COMEX, gold is still trading below 200 DMA, maintaining a bearish demeanor. On the positive side is the fact that last week's low of $1,760 per ounce not only held but was followed by strong bullish market sentiment taking gold pricing back above $1,800 per ounce. Right now, we expect market to consolidate in narrow range.

Silver

Silver prices are trading under $28. Technical indicators on the 1-hourly chart have been gaining negative traction and support prospects for further weakness. The level of $28 now seems to act as an immediate resistance ahead of the $28.30-35 region while more selling can be witnessed below round figure of $27. In MCX, 70,700 is the immediate resistance where silver has taken resistance multiple times while 68,000-67,000 is the support zone. Right now it is wait and watch mode as silver is trading in between resistance and support with no clear direction.

Crude oil

Oil prices are trading at a year’s high level on signs that global coronavirus restrictions were getting eased, although concerns about the pace of a US economic recovery and the return of Texas oil production kept gains in check. US inventories have started increasing after cold snap is getting over. The main reason for such strong upmove in crude oil was market was underestimating amount of oil production lost in Texas due to the bad weather. Going ahead, we might see some pullback in prices as Saudi Arabia has said that it is comfortable with the prices and will cut its voluntary production. The extended cartel (OPEC+) is meeting in early March to discuss progress with its production cuts, and the Texas events could strengthen the hand of producers that want to start boosting production sooner rather than later.

Natural Gas

Natural Gas has shown signs of exhaustion and now prices are back to its normal level after US cold snap has retraced. Natural Gas has breached $3 so now next support comes at $2.4 and we are bearish on the counter. Given enough time I think we are more than likely going to continue to see sellers jump in and at the first signs of pullback. Texas has started preparing to restart its natural gas production so supply is coming in the market and demand is expected to decrease.

Recommendation

Sell Copper | TGT: 683 | Stoploss 714

Copper is in overbought zone as RSI_14 is at 80. Exhaustion is being witnessed as on the daily scale, we have seen emergence of ‘Bearish Engulfing’ candlestick pattern. Prices are due for correction as copper is trading far from its short-term moving average of 20 DMA. Historically, prices do not sustain far from its moving average, so we are anticipating pullback and recommending short position with stoploss of 714 closing basis.

Sell Zinc | TGT 218 | Stoploss 230

Zinc is taking support at its 20 DMA and RSI_14 has pulled back from overbought zone to neutral zone of 53. Below 50, we may see selling momentum picking up. ‘Doji’ candlestick formation when RSI_14 was overbought followed by negative subsequent candles indicate sellers have taken hold and we may see zinc testing its next support of 218. So, sell at 225 for expected target of 218 and stoploss of 230 closing basis.

Disclaimer: Bhavik Patel is Sr. Technical Analyst (Currencies/Commodities) at Tradebulls Securities. Views are personal.