One of the most anticipated moves that market participants have been waiting for, is a rally in the Commodities space. We had seen some signs of this in December ’20-January ’21, but those moves didn’t sustain. On the contrary, the base metals moved below their resistances and consolidated for two months.
Aluminum was the lone star in this group that continued to power through, despite the overall weakness that was prevalent in this sector.
This was a major reason why we continued to hold out for a rally in the base metals- Relative Strength. Aluminum was displaying relative strength against the rest of the metals. Had it been a scenario of overall weakness, Aluminum would be moving south as well.
We’ve noticed a pick-up in activity in the same names that were correcting/consolidating and thought this is as good a time as ever, for an update!
Anyone looking at this chart could tell that Aluminum has been on a tear. The price broke out of a three-year base and achieved our target of 189. Following this, the rally has been uninterrupted as it attempts to move towards its next target of 227. When the price breaks out of big bases, it is generally followed by a strong move. That is exactly what we’re seeing here.
The indicator too isn’t shying away from displaying strength and this adds to our conviction in the current move.
We are bullish above the level of 189 with a target near 227.
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