Just to be honest, how many of you traders knew of Guinea existence before this September? And if You did, how good you knew this country? Can you show it clearly on the map?
Many of market players followed by the crowd are screaming out loud that the military coup in this country is responsible for a spike in aluminium prices. However, if we look at the price chart of this metal we could see a strong uptrend that has started quite a while ago. A global U upside turn has formed in May 2020, while a continuous rally in aluminium prices is spinning off for eight consecutive months with 43.73% upside swing.
And a military coup a week ago in a small little known African country that produces 20% of world bauxite output is only an additional factor to boost aliminium prices, but certainly not the major one. What is the main engine for the rally is the demand and rising global consumption of metals and plans of China to decrease aluminium production to reduce carbon dioxide emissions. China’s aluminum and alumina factories are forced to slash down production by half this September. Any new projects in aluminium production are suspended.
On this background many analysts suggest the upside trend for aliminium prices would continue at least for coming months.So, the market hasn’t change too much with this military takeover in Guinea as the demand for the aluminium remain high before and after it. Naturally, a new price record from May 2011 at $2875 per ton was set. But it is destined to happen even without Guinea phenomena.
To understand this one may look at the technical picture on the price chart. Oscillators like WilliamsR and STOCHRSI (14) are within the overbought range, while all trend indicators are below the price. Important support levels are drawn by 100 days and 55 days exponential moving average on daily charts, penetrating a zone between $2490 and $2585 per ton. Prices are above these levels since August 2020.
Moreover, the upside trend that has started in January 2021 is also crossing a $2565 level duplicating the above mentioned zone. This landmark was also the highest price level for 2018. And now it became a support for aluminium prices.
Technically, it the price scales back to the area of $2560-$2585 per ton we may receive a good buy entry point. And such investment remains a good idea for long-term perspective as aluminium is the second largest metal in the world by consumption.
Many of market players followed by the crowd are screaming out loud that the military coup in this country is responsible for a spike in aluminium prices. However, if we look at the price chart of this metal we could see a strong uptrend that has started quite a while ago. A global U upside turn has formed in May 2020, while a continuous rally in aluminium prices is spinning off for eight consecutive months with 43.73% upside swing.
And a military coup a week ago in a small little known African country that produces 20% of world bauxite output is only an additional factor to boost aliminium prices, but certainly not the major one. What is the main engine for the rally is the demand and rising global consumption of metals and plans of China to decrease aluminium production to reduce carbon dioxide emissions. China’s aluminum and alumina factories are forced to slash down production by half this September. Any new projects in aluminium production are suspended.
On this background many analysts suggest the upside trend for aliminium prices would continue at least for coming months.So, the market hasn’t change too much with this military takeover in Guinea as the demand for the aluminium remain high before and after it. Naturally, a new price record from May 2011 at $2875 per ton was set. But it is destined to happen even without Guinea phenomena.
To understand this one may look at the technical picture on the price chart. Oscillators like WilliamsR and STOCHRSI (14) are within the overbought range, while all trend indicators are below the price. Important support levels are drawn by 100 days and 55 days exponential moving average on daily charts, penetrating a zone between $2490 and $2585 per ton. Prices are above these levels since August 2020.
Moreover, the upside trend that has started in January 2021 is also crossing a $2565 level duplicating the above mentioned zone. This landmark was also the highest price level for 2018. And now it became a support for aluminium prices.
Technically, it the price scales back to the area of $2560-$2585 per ton we may receive a good buy entry point. And such investment remains a good idea for long-term perspective as aluminium is the second largest metal in the world by consumption.
