Will Aluminium pause its recent fall?
Aluminum prices were able to recover by 1.85% yesterday. Prices found support as authorities’ efforts to rein in worries over the global banking system helped calm investor nerves. And after the Euro and Pound gained slightly.
The greenback had a neutral to slightly negative trade yesterday against most major currencies as investors appeared hesitant to place big wagers in either direction as they sought clarity on the fallout from the recent collapse of two U.S. lenders and the rescue of Credit Suisse.
Global banking stocks, which have been battered this month following the sudden collapse of Silicon Valley Bank and Signature Bank (NASDAQ:SBNY), received some respite on Monday after the Federal Deposit Insurance Corporation said First Citizens BancShares Inc would acquire all of Silicon Valley Bank’s deposits and loans from the regulator.
The euro was 0.19% higher at $1.07825, after data on Monday showed German business morale unexpectedly improved in March despite the banking sector turmoil.
Further, Sterling edged higher, with investors’ appetite for risky assets returning as they awaited a speech from Bank of England (BoE) governor Andrew Bailey later in the day. The British bound was up 0.39% at $1.227
Adding to this, on the fundamentals, the resumption of production by aluminum smelters in Sichuan, Guizhou and other places has led to a slight recovery on the supply side. Downstream consumption continued to pick up, driving domestic aluminium ingot social inventory to fall rapidly. The short-term aluminum prices may rally slightly, driven by improving fundamentals.
Technical Outlook
Since 30 January 2023, Aluminium prices witnessed a downside momentum. It continued falling from the peak of 227.45 and made a low of 202.70 in last week.
Today, prices were able to recover by 1.85% and settled at 206.45.on the weekly basis, it witnessed a minor loss of 0.39% at 202.70.
On the above chart, Aluminium prices rebounded from 201.20 coincided with previous swing supports. Adding to this, formation of a high wave candlestick after more than eight consecutive week fall is creating a probability for short term pullback.
Hence, prices expect to test first immediate resistance 209.50. And a break above 209.50 on a closing basis will open the door for next resistance 215.00
On the downside, immediate support is seen at 203.50-201.20 and a closing below 201.20 only will extend the recent fall. And prices may drop towards 198-195 in the near future.