September 2019 | Base Metals
Technical analysis: About turn
The base metals had been looking strong last week but generally hit resistance and are this week pulling back to test support.
Aluminium LME aluminium price action has been kept within the large descending wedge-like pattern that has constrained trading all this year. Aluminiums latest rally was met with strong selling pressure in the upper channel of the descending wedge and short-sellers have since taken over. The negative close on Monday September 16 brought the LME aluminium price below the 50 and 100 DMAs. We envisage there is more downside in the coming days since the technical indicators that we follow, the daily RSI and stochastic lines, have only started to turn lower. A retest of the 20 DMA is highly possible now but a negative close below it could trigger more technical selling which could leave aluminium vulnerable to further declines, perhaps all the way toward the lower channel of the descending wedge.
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