LME zinc has formed a bullish consolidation pattern above $3,400/mt over the past three weeks, with each test of support drawing stronger buying volume. The pattern resembles a bull flag, suggesting the uptrend from the March lows of $2,900/mt is intact.
The $3,600/mt level is the immediate resistance, marking the May 2026 high. A weekly close above this level would confirm the breakout and open the door to $3,800/mt, the next structural resistance from the January 2026 peak.
Volume analysis supports the bullish view. Advancing days have averaged 2.3x the volume of declining days over the past two weeks, indicating accumulation. The open interest on LME zinc futures has risen 5% during the consolidation, suggesting new money coming in.
The RSI at 62 is in bullish territory with room to run before hitting overbought (>70). Previous rallies in the zinc market have seen RSI reach 75-80 before peaking, suggesting the current move has further upside potential.
On the downside, a break below $3,400/mt would invalidate the bullish pattern and expose the 50-day moving average at $3,320/mt. However, given the inventory backdrop, a bearish breakdown is the lower-probability scenario.
Zinc's risk-reward favors positioning for a breakout above $3,600/mt. Buyers should place covered call strategies or costless collars to participate in upside while protecting against inventory-driven spikes. A move to $3,800/mt would add $200/mt to procurement costs.