Soaring aluminum prices are discussed in the Wall Street Journal Monday. The article cites reduced production because of high energy prices and fears of supply disruptions if Russia, a big aluminum producer, invades Ukraine. Could this be an opportunity to make some money on the shares of Alcoa (AA) ? Let's check out the charts.
In this daily bar chart of AA, below, we can see that prices have tripled in the past 12 months. AA has managed to stay above the rising 200-day moving average line the past year while trading above and below the shorter 50-day moving average line.
The On-Balance-Volume (OBV) shows a rise from July telling us that buyers of AA have been more aggressive. The trend-following Moving Average Convergence Divergence (MACD) oscillator has stayed above the zero line for much of the past year but is currently in a take profits mode.
In this weekly Japanese candlestick chart of AA, below, we see a mixed picture. The recent candles show upper shadows telling us that traders are rejecting the highs but our favorite indicators are still positive. Prices remain in a longer-term uptrend above the rising 40-week moving average line.
The weekly OBV line is in an uptrend from early 2020 while the MACD oscillator is positive.
In this daily Point and Figure chart of AA, below, we can see a potential downside price target in the $43 area. Strength above $63.50 should refresh the uptrend.
In this weekly Point and Figure chart of AA, below, we can see a potential price target of $104.
Bottom line strategy: The daily Point and Figure chart of AA is pointed lower while the weekly chart is bullish. Traders should wait for strength above $64 before going long AA. Risk to $53.
