Aluminum May Fall to $2,018 Support Level: Technical Analysis

Nov. 19 （Bloomberg） -- Aluminum may fall to about $2,018 a metric ton after last week’s decline from a two-year high, implying a 13 percent drop from current prices, according to technical analysis by Commerzbank AG.

The attached chart shows aluminum has slid 7.2 percent from $2,500 a ton on Nov. 11. The metal may fall to its 55-week moving average of $2,164 and a 20-month support line at $2,018, Commerzbank said in a Nov. 17 report.

“Aluminum saw a minor break into two-year highs and was rejected,” Commerzbank technical analyst Karen Jones said in the report. “The divergence of both the daily and weekly relative strength index implies that the market has charted an interim top.”

Aluminum for three-month delivery traded at $2,320 at 10:21 a.m. on the London Metal Exchange, taking its gain this year to 4 percent. The metal is used in cars and airplanes, packaging and construction. The price on Nov. 11 was the highest since September 2008.

Its 14-day relative strength index was at 45 today. Some analysts view a level of 70 as a sign that prices may be poised to drop, and a level of 30 as an indication of possible gains.

In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.