LME aluminum's bounce from $3,500/mt support is encouraging for bulls, especially given the magnitude of the COMEX sell-off. The $3,500/mt level aligns with the 50-day moving average and the May 2026 lows, creating a triple-confluence support zone.
The RSI at 42 is approaching oversold territory, suggesting that selling pressure is exhausting. A move below 30 would signal capitulation, but the bounce from support suggests buyers are stepping in earlier than previous cycles.
Resistance at $3,700/mt marks the June high and the level from which the COMEX sell-off originated. A daily close above $3,700/mt with volume would negate the bearish breakdown and signal a resumption of the broader uptrend from the March lows of $3,200/mt.
Volume on the sell-off was elevated, with 494 lots traded on the COMEX June 12 session — well above the 20-day average. This suggests the move was driven by large speculator liquidation rather than fundamental repositioning by commercial accounts.
The cash-to-3-month contracdo has narrowed from $25/mt to $12/mt, indicating that physical buyers are stepping in to take advantage of lower prices. This is a constructive signal for the demand outlook.
The $3,500/mt support zone is a strategic buying level for H1 2027 coverage. Set limit orders at $3,480-3,520/mt. If the COMEX sell-off continues below $3,400/mt, that would indicate a deeper correction — in that scenario, defer spot purchases and monitor LME warehousing data.