Alcoa Corp (NYSE: AA)

Alcoa Corporation produces and sells bauxite, alumina, and aluminum products. The company offers aluminum sheets for the production of cans for beverage and food. It also engages in the aluminum smelting, casting, and rolling businesses; and generation and sale of renewable energy, as well as provision of ancillary services.

Take a look at the 1-year chart of Alcoa (NYSE: AA) below with the added notations:

1-year chart of Alcoa (NYSE: AA)

AA has formed a key support level at $44 (green) over the past several weeks. In addition, the level of $50 (red) has been key resistance on two separate occasions. If AA continues higher, the $50 level could send it back down again, while a break above that $50 level likely means higher prices.

The Tale of the Tape: AA has key levels at $44 and $50. A trader could enter a long position on a pullback down to $44, or on a break above $50, with a stop placed under the level. A break below $44 could provide an opportunity to get short.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT