LME three-month aluminum is trading in a well-defined range. The $3,400 level has held as support on two tests in the past two weeks. Each test saw a sharp intraday reversal on higher volume, indicating strong physical buying interest at those levels.
The 50-day moving average at $3,520 is the immediate resistance. The price has closed above it only twice in the past 10 sessions. An RSI reading of 48 is squarely neutral, giving no directional signal. The MACD is flat near the zero line, suggesting the consolidation phase could continue.
The Bollinger Bands have narrowed significantly, with the upper band at $3,620 and the lower band at $3,380. Narrowing bands typically precede a breakout, but the direction is unclear. A close above $3,600 would signal the start of a new uptrend, while a close below $3,350 would be bearish.
Open interest on LME aluminum has declined 8% over the past two weeks to 198,000 lots, suggesting that longs are reducing positions rather than adding. This supports the range-trading interpretation rather than a directional move. Volume has been unremarkable, averaging around 12,000 lots per day.
The aluminum market is in a waiting pattern. Buyers should use the $3,400-3,450 zone for layering hedges, with stops below $3,350. If the range breaks above $3,600, accelerate coverage through Q4. Given the neutral RSI and declining open interest, there is no urgency to chase prices above $3,550.