Daily Market Analysis

Markets Drift Lower Amidst Geo Political Tensions

Yesterday as macro’s deteriorate ,volumes and prices drift lower with price movements skewed towards the down side. However given the nature and price movements of metals this year I would look for some sort of bottom to be in place in short term ,especially zinc. I would buy in small quantities with a strict stop loss. Dollar Index is at multi month lows against a basket of currencies. Weak US Data again yesterday didn’t help it’s cause.US has joined the group of Saudi Arabia, Bahrain and U.A.E in extending the ban imposed on Qatari citizens for allegations against the tiny rich oil country that it has been funding and are sympathetic to the cause of ISIS . No official statements have come forth from the King but it is expected to come today. FBI ex chief is stated to give his testimony on Thursday to the Congress regarding the Russia Issue . This could bring in sharp corrections if the statements are against Trump and support his alleged relationship and funding from Russia.Re bar remains range bound with a small uptick from yesterday evening prices after making yet another low in the markets.Crude has given up the initial gains yesterday as the Middle East tensions come to the forefront. I suspect that Crude will remain volatile in the near future as this issue looks unlikely to be resolved fast.There is plenty of reasons for the Gold bulls to be happy and this is getting reflected on prices.The market is closely watching these events which could lead to sharp rise in Gold prices but for now it remains to be seen whether Gold prices can Topple $ 1300 in coming few days with an overhang of Fed meet next week.

Zinc has been the laggard with passive selling seen in the counter. A very weak close with prices ending up well below 2500. Inventory has seen little action. There seems to be some light buying at lower levels and if the prices stabilize around yesterday’s low , than a reversal can take place in the coming days I would;d be looking for a buying opportunity as fundamentals still remain intact in the metal. Spreads have seen light bids emerge though front month contracts are offered . Technically a close above 2520 should be the 1st target to negate the damage done in the last few days.Price action mildly positive in the morning.

Support 1 -2475 ( yesterday’s low )
Resistance 1 – 2518 ( this will now act as resistance )
Support 2 – 2459.5 ( this year’s low and strong support expected )
Resistance 2 – 2547 ( yesterday’s high )

Lead had a positive intent though prices have again failed to break the recent ranges. It is high time that it breaks past the 2130 levels that has been the bane in recent times other wise we could see long liquidation in the counter. Tight ranges are generally associated with violent and exaggerated movements on either side. Spreads remain well offered. Technically a good close though it needs to do more in order to sustain prices above 2100. The strong price action needs to be supported by price rise otherwise investors could turn the tables on the counter . A close above yesterday’s high will confirm our suspicion that the prices are in an uptrend.

Support 1 – 2085 ( lot of material changed hands )
Resistance 1 – 2130 ( short term resistance and very congested zone )
Support 2 – 2070 ( remain long term support for the counter )
Resistance 2 – 2150 ( remain medium term resistance )

Aluminium was the laggard yesterday with prices failing to hold on to the 1930 zone. Seller’s aggression seen in the counter. However the positive aspect was it’s ability to hold on to the 1900 levels.We will be watching this counter very closely as a break below 1900 and a close there could attract strong selling in the metal. However inventory has been positive with physical delivery of the metal strong. Spreads have seen Backwardation persisting. Technically a poor close and it’s failure to defend 1900 could attract further liquidation. On the upside prices need to close above 1936 for the metal to regain it’s resilient tone.

Support 1 – 1900 ( remain psychologically important )
Resistance 1 – 1922.5 ( basis 05 May’17 high )
Support 2 – 1892 ( basis 18 April’17 low and congested zone )
Resistance 2 – 1936 ( strong mid term resistance in the counter )

Nickel has shown positive intent but technically has failed to cross the 9000 mark . Passive buying seen in the counter. Spreads have seen buyers emerge at lower levels. Inventory has seen off take in LME controlled ware houses.Technically a better close as compared to it’s recent price action. A close above 9000 will bode well for the counter. On the downside 8790 will act as strong support for the metal.

Support 1 – 8790 ( basis 16 June’16 low )
Resistance 1 – 8940 ( yesterday’s high )
Support 2 – 8705 ( basis 07 June’16 high )
Resistance 2 – 9000 ( psychologically and technically high )

Copper has been positive with buyer’s interest seen in the counter. But as reiterated earlier the failure of the counter to cross 5720-5725 area has attracted selling in the counter in morning session. Inventory has seen declines. Price action has been positive but the failure of the metal to defend 5550 can attract liquidation . Technically a good close but morning price action has dented the charts for now.

Support 1 -5575 ( good support and technically congested )
Resistance 1 – 5609 ( basis 08 May’17 high )
Support 2 – 5550 ( important mid term support )
Resistance 2 – 5650 ( mid term strong resistance )

Tin had a negative price action with seller’s evident in the counter. In morning trades prices have failed to defend the psychologically important 20000. Spreads have been bid for. Technically a weak close with 20200 taken out.

Support 1 – 19910 ( basis 15 May’17 high )
Resistance 1 – 20050 ( lot of material changed hands at this level )
Support 2 – 19775 ( basis 28 March’17 low )
Resistance 2 – 20200 ( will act as strong mid term resistance )

On the macro economic parameter Australia have kept their Interest rates unchanged. We also have Chinese Foreign reserves figures today. Later in the day in US we have Redbook and JOLT’s Job Openings.This week should be volatile as lot of event based risk can happen and Geo political tensions have reared it’s head again in the form of Qatar !