Technical Analysis – Alcoa stock hovers below descending trend line with weak momentum

Melina Deltas, XM Investment Research Desk

The Alcoa stock price dipped to a new two-year low of 24.98 on December 26 and it is currently hovering slightly above this level and below the 20-and 40-simple moving averages (SMAs) in the daily timeframe. The price remains below the medium-term descending trend line, which has been holding since April 19.

However, technically, the RSI indicator keeps moving below the 50 level, while the %K line of the stochastic oscillator printed a bullish crossover with the %D line in the oversold zone, suggesting some gains in the near term.

In case of an upside jump above the SMAs, the price could meet resistance at the 30.20 resistance level, which holds near the downtrend line. A successful upside penetration of this line could send prices towards the 23.6% Fibonacci retracement level of the downleg from 62.35 to 24.98, near 33.75. Slightly above this level, the 34.10 barrier could be the immediate resistance for investors to have in mind.

On the other side, if the price remains below the SMAs, this could increase chances for more downside pressures towards the two-year low. Moreover, if there is significant violation of this region the market could meet support at the 22.60 barrier, registered on October 2016.

Regarding the long-term picture, the bearish outlook has been building up in recent months as the stock continues to record lower lows.