Lead – Zinc Spread opportunity:
As on Friday, 18th Dec 2015, the spread between the Lead Dec minus Zinc Dec MCX is 12.05. Based on below technical observation we are anticipating spread to increase up to 14.50-15.00 levels in next one or two week’s time frame.
As per the chart analysis lead is looking bullish since the commodity is trading above the weekly support levels, indicators are at the equilibrium point 0.500. Whereas zinc is trading below the weekly and daily moving averages, moving averages bearish crossover 13/8 had occurred in the daily and weekly price charts. However momentum indicators had approached the oversold zone. Thus in the beginning of the next week we may see rebound in prices towards the resistance levels and thereafter it may resume the bearish trend.
In the mentioned price chart it is visible that spread prices had breached the consolidation phase resistance levels and as well as the falling trend line resistance levels. Therefore it has a positional to move higher up to 15.00 marks which the previous high is.
Overall bull spread is in progress and expected to extend after a mere correction thus we recommend building long positions.
Strategy:
Buy Lead and sell Zinc Dec MCX: 1st lot at a difference of 10-10.30 and next at 8.80-8.50 TGT 115 SL 6
Note: Call is valid till the contract expiry
