LME zinc continues to respect the $3,400-3,600 trading range that has held since mid-May. The $3,600 level has acted as firm resistance, with three separate tests failing to produce a daily close above it. The most recent attempt on June 9 stalled at $3,618 before pulling back.
The 14-day RSI is at 52.4, down from 62 during the late-May test of resistance. A bearish divergence is forming — prices made a higher high at $3,618 while RSI printed a lower high compared to the May 28 reading. This suggests buying momentum is weakening.
Support at $3,500 (the 20-day EMA) is the first line of defense. A break below $3,500 would target the range floor at $3,420. The 50-day EMA at $3,380 provides a stronger floor below the range.
Volume has declined during the range-bound trading, with average daily volume 22% below the 20-day average. Low volume during range trading typically precedes an eventual breakout, but the direction remains uncertain.
Range-bound zinc offers good hedging opportunities. Buy at $3,420-3,450 support, protect against a break above $3,600 with call options. If zinc breaks above $3,600 on strong volume, resistance becomes support and a move to $3,750 is probable. For physical procurement, target the lower third of the range for monthly spot purchases.