Industry Info

LME aluminium targets $1,639-$1,657 range in three months

LME aluminium may drop into a range of $1,639-$1,657 per tonne in three months, as indicated by its wave pattern and a Fibonacci ratio analysis.

The uptrend from the Feb. 24, 2009 low of $1,279 to the May 3, 2011 high of $2,803 has been reversed more than 61.8 percent, as revealed by a Fibonacci retracement analysis on the trend.

That indicates a remote chance of the uptrend to extend, as the extension should have taken place above $1,861, the 61.8 percent retracement.

For a few weeks, aluminium has been hovering below this key level, such a behaviour has significantly increased the chance of a further drop to $1,739, the 76.4 percent retracement.

However, support at $1,781 is preventing the drop and probably will cause a rebound to $1,861 or a sideways move for two to three weeks.

This support is provided by the 76.4 percent Fibonacci projection level of a downward wave (c), which started at the Jan. 3 high of $2,184. The next support will be at $1,657, the 100 percent projection level.

Strategically, the target range of $1,639-$1,657 will be confirmed when the metal drops below $1,758, the June 27 low.

A break above $1,861 may result in a further gain to $1,983, the 38.2 percent projection level of the wave (c) target.

No information in this analysis should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses.

Source: Reuters