January 2012 | Base Metals
Finally time to job the short side: Technical analysis
The rallies have finally encountered resistance. Most metals turned lower on Monday, which was enough to turn the RSI and stochastics lower too. This may finally be our signal to job the short side.
AluminiumAluminium’s rally moved to $2,290.25/tonne, which was just shy of a former peak at $2,295/tonne from October. Prices have rebounded to and slightly through the 38.2% Fibonacci retracement line of the May to December downward correction. Having bounced, we now are waiting to see if prices have the energy to climb to the 50% line at $2,380/tonne. However, having reached the 38.2% line, prices have slipped and that has been enough to turn the technical indicators negative with the RSI turning lower and the stochastics crossing lower and more to the point picking-up downward momentum. Given the cross lower in the stochastics we would now look to job the short side on a move down below $2,190/tonne. The lower Bollinger band is down around $2,027/tonne so should weakness follow, prices could have quite far to correct....
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