article 3 months old

Time To Look At Iron Ore

Technicals | Apr 11 2018

Bottom Line 10/04/18

Daily Trend: N/A
Weekly Trend: Down
Monthly Trend: Down
Support Levels: 58.62 / 54.40 / 47.90
Resistance Levels: 78.60 / 95.00 / 111.00

Technical Discussion

Iron Ore spot prices for benchmark 62% fines has been well and truly on the nose. Yet there is anticipation of stronger demand coming into play soon as the seasonally strong construction period starts to build up over the coming months. As we will convey in our technical section tonight, price last week tagged a low of 62.67 yet last night found a bid off these lows and closed up at 63.95. Even more impressive gains were made by the higher and lower grades. All this was assisted by strength in Chinese Steel prices.

Reasons to stay neutral :
→ Chinese demand erratic yet overall looking strong
→ recent downside price action looking to reverse shorter term
→ relentless production by the majors still in force
→ coiling process potentially bullish medium term 

Our key focus technically continues to be the Elliott ascending triangle which will ideally have bullish outcomes over the coming months. The official bullish trigger is above the wave-(d) and wave-(b) highs circa 78.60, with the triangle pattern targeting just over the 100.00 price point. Of interest as well on this move with be the Wave-A vs Wave-C equality target which measures in at 120.00 which is even more significant as it takes price back above the 90.00 – 110.00 resistance zone. Price is back to oversold on the weeklies and presently hugging the 200 week moving average. So combined with the rest of the analysis, right here and now is the perfect spot for buyers to return and for price to attempt a medium term move higher. It will likely be multi month in the making as well if it can gather momentum. All bullish bets are off though below 58.62.    

Trading Strategy

The big 3, FMG, RIO and BHP are the ASX stocks we continue to follow in relation to Iron Ore, and all have today had a jump post decent corrective moves lower, and off well oversold positions on our divergence indicator. Pete in the ASX Global Research area is already up and riding on BHP, yet the other two are also potentially aggressive low risk trading opportunities around present levels as well. Definitely worth putting at the top of your watch lists or considering partial positions right here. 

Re-published with permission of the publisher. www.thechartist.com.au All copyright remains with the publisher. The above views expressed are not by association FNArena's (see our disclaimer).

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