Aluminum is “probing resistance” of $2,400 a metric ton and may gain 6.4 percent to this year’s peak, according to a technical analysis by Barclays Capital.
The attached chart shows the metal is heading for the $2,400 “swing target” after rallying the past four months, a level that has proved a “pivotal zone” the past four years, according to Barclays. The second chart shows a rise above that price in the next several days may push the metal to this year’s high of $2,494.
“It still looks like it wants to move higher,” helped by a weakening dollar, London-based Barclays analyst Phil Roberts said by phone. “The obvious target would be the 2010 high, which is $2,494.”
Aluminum for three-month delivery on the London Metal Exchange reached $2,494 on April 16, the highest price since September 2008, and traded at $2,345 at 6:31 a.m. in London. The metal, used in transport, packaging and construction, is up 5.2 percent this year. The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, yesterday slumped to the lowest level in more than eight months. A weaker U.S. currency makes dollar-priced metals cheaper in terms of other monies.
“The dollar looks fundamentally weak,” Roberts said. “The weakening process intensified last week. We’ve got no reason to suspect yet that it’s over.”
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.
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