Current trend

Shares of Alcoa Corp., one of the largest aluminum producers, are adjusting at 43.00.

Despite significant supply chain problems, global prices for alumina, an intermediate in aluminum production, reached record levels above 700.0 dollars per ton in October, with the sharpest changes recorded on the Shanghai Futures Exchange (SHFE), a key distribution center before shipments to Chinese factories. Due to the growth in prices, the ratio in the position of the spread between aluminum and alumina increased from 15.0% at the beginning of the year to 29.0%, which creates conditions for speculative operations that can further increase the price of raw materials. At the end of October, the volume of trading in alumina futures reached such values that the exchange had to suspend operations and adjust trading limits.

Against this background, leading analysts are already predicting Alcoa Corp. EBITDA growth due to additional profit. In particular, this was pointed out by the experts of Jefferies Financial Group Inc., confirming the rating of the emitter's shares at the "buy" level and raising the target price from 45.0 dollars to 50.0 dollars per paper. Analysts also noted that EBITDA growth of 40.0% compared to the second quarter was the key point of the report.

Support and resistance

On the D1 chart, the asset turned around again, working out an ascending channel with the boundaries of 46.00–37.00.

Technical indicators reversed again and issued a buy signal: the range of EMAs fluctuations on the Alligator indicator is expanding in the direction of growth, and the AO histogram forms new correction bars, being above the transition level.

Support levels: 40.00, 34.00.

Resistance levels: 44.00, 51.00.

Trading tips

In the event of a reversal and continued growth of the asset, as well as price consolidation above the resistance level of 44.00, one may open long positions with a target of 51.00 and a stop-loss of 41.00. Implementation period: 7 days and more.

If the asset continues to decline and consolidate below the support level of 40.00, one can open short positions with a target of 34.00 and a stop-loss of 42.00.