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March 2018 | Base Metals

Technical analysis: Continuation patterns

Since their recent highs in February, January and even December in some cases, the base metals have been consolidating. For most, this phase of consolidation looks orderly and seems to be forming short-term continuation patterns within broader, long-term uptrends. The zinc and lead charts look weaker, though both are also oversold now.

Aluminium continues to trade within a downtrend channel, but is fast approaching a key technical support level. Previously, the rising 200 DMA provided support to the December-2017 low and created a strong platform for prices to rebound to the December high at $2,290.50 per tonne. We suspect dip-buying to emerge again at this level because the technical indicators that we follow are slightly oversold already. The daily RSI remains bearish, but has very little room to the downside. A successful retest of the 200 DMA and rebound is likely to allow aluminium to undergo a relief rally toward the upper channel of the downtrend line.



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