Technicals | Oct 31 2018
Bottom Line 30/10/18
Daily Trend: N/A
Weekly Trend: Up
Monthly Trend: Up
Support Levels: 62.99 / 58.62 / 54.40 / 47.90
Resistance Levels: 78.60 / 95.00 / 111.00
Technical Discussion
Iron Ore spot markets have continued to climb despite weakness in Chinese Steel markets. The higher grades have been the stand out performers yet the benchmark 62% fines that we chart has also been trading solidly of late be it closing the last session flat at 72.58. It's been a solid 20% rise off the 2018 lows though. Yet need to be aware that as winter approaches in the Asian region, prices may start hitting some head winds. So what we are seeing here now with robust prices, could simply be a rush on boosting steel output in China before authorities impose their usual winter controls. Over all though price has been trading solidly off the early July lows be it levels are now well overbought on our weekly divergence indicator.
Reasons to stay neutral (back to medium term bullish above 78.60) :
→ Chinese demand erratic yet overall looking strong
→ relentless production by the majors still in force
→ coiling process potentially bullish medium term and now looks highly evolved
'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 then targeting just over the 100.00 price point.' So far so good with buyers recently stepping up to the plate with the Wave-E of (B) low continuing to hold strong circa 62.99. For now the move off these lows is a-b-c in nature only, yet if price can continue to stretch higher from here then an impulsive move north could really start to gather some upside momentum. As mentioned though the all important number is 78.60 so any bullish rhetoric we are implying here will be all for nothing if 78.60 cannot be broken above. If it can be broken above then we will not just be looking at the triangle target, we will also be looking for the larger Wave-(A) vs Wave-(C) equality move to unfold which targets 121.00 eventually. Taking it one step at a time for now.
Trading Strategy
As we don't trade the contract, the big 3 Iron Ore bellwethers, FMG, RIO and BHP are the ASX stocks we continue to follow in relation to Iron Ore, and all three have remained robust medium and longer term (be it weak shorter term). FMG we highlighted in our last review as bouncing around a strong support line, and even though that has continued since our last review, it has today bounced clear out of that mini basing pattern, so one to keep an eye on. RIO has also bounced strongly today off a keenly watch 61.8% Fibonacci retracement zone. So potentially looking for some further upside here as well more immediately. Very early days though so plenty still to prove.
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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