Shares of aluminum producer Alcoa (AA) was raised to a "buy" rating by Citi Wednesday on their more positive view of aluminum. Let's check out the charts and indicators for a technical perspective.
In this daily bar chart of AA, below, I see a basing pattern. The shares made a "left shoulder" in July and a "head" in late September. I can see a complex "right shoulder" in December and February. AA has been trading around and on the 50-day and 200-day moving average lines. The trading volume increased around the head and has been more active in the months since.
The On-Balance-Volume (OBV) line shows strength from September and tells me that buyers of AA have been more aggressive than sellers. The Moving Average Convergence Divergence (MACD) oscillator is slightly above the zero line.
In the weekly Japanese candlestick chart of AA, below, I see a major uptrend followed by a roughly one-third correction. The shares are trading above the 40-week moving average line but its slope is still negative.
The weekly OBV line is trying to improve from an October low. The MACD oscillator is close to crossing the zero line and thus close to an outright buy signal.
In this daily Point and Figure chart of AA, below, I can see that the shares reached a downside price target in the $47 area. A trade at $46.19 could weaken the picture.
In this weekly Point and Figure chart of AA, below, I can see a price target in the $87 area.
Bottom-line strategy: AA could continue to trade sideways a bit longer before launching a sustained uptrend. Investors should be patient buyers. Risk to $39.
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