Alcoa Shares Face Pressure, Eye Critical $28 Support Level

On Tuesday, shares of Alcoa Corporation AA continued their downward trend. Although the stock was trading higher in the pre-market on Monday, selling pressure ultimately overwhelmed buying, leading to a closing loss of nearly 6% for Alcoa.

Investors Monitor $28 as Key Support Level

Traders are currently focused on the $28 mark, historically a significant support level for Alcoa. This is why it has been designated our Stock of the Day.

Historically, the $28 level has acted as support, particularly in early August and September. As illustrated in the accompanying chart, each time the shares reached this level, a subsequent price increase followed.

This pattern may repeat itself soon.

Some traders who sold their shares around $28 in August may wish they had held on, especially when the price later climbed. Many have expressed intentions to repurchase if the stock revisits this price point.

Read Also: Target CEO Cautions Tariffs Will Pressure FY25 Profit, Consumer Uncertainty To Hit Feb Sales

When Alcoa’s shares dropped back to around $28 in September, numerous regretful sellers placed buy orders. The influx of buy interest helped re-establish support at this level. If the stock continues its current downtrend and hits $28 again, it’s likely that buyers will return, offering support once more.

Understanding Support Levels and Buying Behavior

In trading terminology, support indicates a price point where a significant volume of buy orders exists. At this level, more shares are available to buy than to sell. Consequently, downward movements in price tend to stabilize or halt at support levels. Sellers can execute trades without needing to reduce their asking price.

Interestingly, as buying interest grows, some buyers may start feeling anxious. They sense heightened interest at $28 and become concerned that they might need to increase their bids to secure shares. In this scenario, sellers can capitalize on this urgency.

This chain reaction can incite a bidding war, which may push the stock price even higher. If Alcoa once again approaches the $28 mark, we might witness this dynamic unfold.

Read Next:

Photo: Vladimir Mulder/Shutterstock.com