Chart of the day: Aluminium alert
As we warned mid-August, the leap higher during the week ending August 11 proved a step too far and too sudden for Shanghai aluminium, and it was time to consolidate those gains. This is exactly what has happened since then, with volume back down to more normal levels and open interest levelling out. The sideways move has brought prices back down almost to the mean regression, correcting a Fibonacci 38 per cent of the summer’s gains. Because all aspects of the weekly Ichimoku cloud system are bullish we are looking for the market to try to form an interim base between now and the end of the year. Preferably around the 15,855 yuan (US$2,390) area, and no lower than the 50 per cent retracement level at 15,400 yuan per tonne.
Nicole Elliott is a technical analyst