The Bigger the Base (Metals) the Higher in Space

September 14, 2021

Base Metals have long been a part of our conversation here. Specifically, the Commodity supercycle has been one narration that you've been reading here since the end of last year. Of course, the trend hasn't been a simple upward motion. It's been anything but that, to be honest!

But time and again, we get some signals that reach out to us and say, 'we are alive'. It's like waiting for your spacecraft to send you a signal saying it's A-ok. The past week was just that in terms of the base metals move that we saw. Did you see it too?

Earlier this week we shared the metals index making new highs and displaying the strength that we're seeing in this segment. Here is our very own custom index that's basically doing the same thing. You can see how strong the trend has been in the base metals space whereby we witness minor pauses in trend, followed by resumption.

The custom index is fast approaching its overhead resistance level at the 261.8% Fibonacci extension level. If however, the strong trend continues, we could witness a breakout above this level too! Remember, there was an 'if' in the earlier statement.

Click on the image to zoom in.

Let's take a look at the metals and check the levels that we need to track.

First up, we have the leader of the pack! Aluminum has been outperforming the base metals space for some time now and continues to display the same tendencies even now.

We got the breakout in aluminum early on. But what we saw last week was a strong follow-through in the move. With that in place, the price is now halfway through its target.

We are bullish as long as the price trades above the level of 210, with a target near 260.

Leading up to Aluminum is Lead itself. We saw a strong bullish candlestick come through as the price moved past the resistance of 181.50

With this move, we can look for the next price target of 210 as the level to be followed. We're looking at a follow-through of a big-base breakout.

We are bullish only as long as the price trades above the level of 181.50. A move below that, and the move in lead would be dead.

Up next we're taking a look at Zinc. For several weeks now, the price had been consolidating in a narrow range. With the price stuck in that range, there was not much to be done before. Last week we saw the price move out of the trading range as a sign of strength. Although we haven't seen the follow-through in the breakout so far this week, we will watch out for a price move above 254.

A sustained move could take the price higher towards 295. The risk management level to be followed would be 254.

Nickel has been trading in no man's land for a while. But we did get to see a strong bullish candlestick here as well. A continuation of the current trend can take the price higher towards its target of 1,630.

The risk management level to track continues to be 1,425. Nickel is neither the leader nor the follower at this point. It's moving with the flow of the rest of the commodities.

The laggard has been Dr.Copper. The price met our upside target of 814 and turned over dutifully from the same levels. Currently consolidating below its highs, the price has a long way to go before any breakout bells can start ringing.

With that being said, the price held its ground despite there being moments where it could've given up. There is a certain resilience in base metals that can be seen in times of distress. This is probably the resilience that will pull it through this messy market. Gotta watch out for that though.