Over the past six months, volume and open interest in Shanghai’s zinc futures contracts have increased steadily, which is perhaps not surprising as prices across the globe have rallied from depressed levels this year. They have already retraced half of the losses suffered in 2015, yet we feel they are likely to rally further. A measured target based on the height of this year’s triangle consolidation should take the contract through the 61 per cent Fibonacci retracement resistance at 15,275 yuan per tonne to 15,725 yuan. A bullish view is supported by the rising Ichimoku cloud. More importantly, prices are likely to move less, and a lot more slowly, than they did in the wild gyrations of 2008 and 2009.
