LME aluminium may test a resistance at $2,330 per tonne in three months, a break above which could open the way towards the next resistance at $2,480. The resistance is identified as the 50 percent Fibonacci retracement of the downtrend from the July 2008 high of $3,380 to the February 2009 low of $1,279.
The metal is riding on a steady uptrend, which is driven by a wave (3), the third wave of a five-wave cycle from the November 2015 low of $1,432.50.
This wave has travelled above $2,082 and is unfolding towards $2,330. However, it has to break a lower resistance at $2,279 before extending to $2,330. The resistance will be established by the 61.8 percent Fibonacci retracement of a shorter downtrend from the May 2011 high of $2,803 to $1,432.50.
The resistance zone of $2,279-$2,330 could be strong enough to trigger a decent correction, or at least to stop the powerful wave (3) for a few weeks.