Technicals: Wobbly Aluminum
Any small bear market can become a larger bear market, just as any small bull market can become a larger bull market. Long-time readers will know that I like to “rule in and out” bear markets and buy before and after a markets turn lower.
Aluminum is experiencing a bout of weakness at the end of this week, which the last time the market was trading lower was on Monday, September 11th. Just as the market was breaking support in that same week, it reversed and took out the August 2018 swing high, which was previously resistance, but never support.
This time around, on the drop, the support levels have held, but there is some additional downside pressure expected this week and into next week.
As I mentioned last week, I would want to be selling into strength, but the good news is that we still have the key Fibonacci support level to defend.
Now, about the technical price action… The chart shows the metal on the daily chart. Relative Strength (RSI) looks to be at oversold levels, though the lows tested (around 10:45 AM EST, October 31st) registered in mid-range zones. Relative Strength is now turning sideways, while RSI oversold levels are closer to neutral levels.
The daily chart does show some light support, both in the area between 11 and 12, but there is also support at the 76.4% Fibonacci retracement level, in the 1.30-1.36 band (September 8, 12, 12:20 PM EST).
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