The price of Aluminium witnessed a sharp correction from the highs of Rs 120.35 levels as on 01st
June, 2011 to register a low of Rs 110.90 levels as on 27th June, 2011.Since then the price of
aluminum have been trading in a broad range of Rs 112.65—Rs 111 levels.
But, the key observation to be made is that the price pattern of Aluminium within this broad trading range has taken shape of an Inverted head and shoulder price pattern on the intraday charts.
The Neckline resistance for the said pattern is placed at the Rs 112.65 levels. Upside targets of Rs 113.70 / Rs 114.50 levels can be seen in this counter once the price breaks above the neckline resistance level mentioned above.
Some of the other positive technical factors are that the price of aluminum has also closed above its key moving average clusters and the RSI indicator is also come out of the oversold territory backed by a positive divergence.
We recommend traders to buy on a break above Rs 112.65 levels for the above mentioned upside
targets. A stop loss of Rs 111.55 levels should be maintained on all long positions.
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