Iron Ore: Remain Bullish

This story features BHP GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: BHP

Bottom Line 16/06/21

Daily Trend: N/A
Weekly Trend: Up
Monthly Trend: Up
Support Levels: $174.94 / 148.42 / $116.47
Resistance Levels: N/A (all-time highs)

Technical Discussion

Reasons to remain bullish longer-term:
→ Chinese demand remains strong
→ relentless production by the majors still in force yet fulfilling the demand
→ larger multi-year [A]-[B]-[C] move north remains in play
→ expected impulsive move north continuing to play out off the Wave-[B] low

“The typical Wave-3 1.618 x W1 extension measures in at $206.38 USD. So with this target now having been exceeded, we need to be on the lookout for a Wave-4 breather to start taking shape sooner rather than later.”

Well since our last review above, the Wave-3 appears to have locked in a high point circa $218.38. With the Wave-4 now in progress. In Elliott Wave theory, Wave-4’s are generally shallow which fits what we are seeing at the moment. Yet they can also be quite complex which means some further sideways consolidation, perhaps even with a slight downward bias, could well be seen over the coming weeks before it finally completes.

Our divergence indicator at the moment is also overbought. So the above scenario unfolding could unwind it back to oversold which will then be a solid platform for the next run higher to nurture from. We certainly won’t argue with price though if it simply wishes to commence the final Wave-5 of (5) more immediately. Especially as the key outside reversal weekly price bar from last week was a bullish one.

What’s important to note here though, is that when the Wave-4 does finally lock in and the Wave-5 commences its journey north, it may well prove to be the final wave in the immediate cycle. So locking in a Wave-5 of (5) of [C] which is significant. And potentially being a catalyst for a decent longer-term corrective phase to start playing out. If our immediate positioning of the trend is correct though, such a major high point locking in could still be many months away. For now, the price chart continues to look bullish, with higher levels continuing to be our expectation over the short to medium term as a minimum.

Trading Strategy

With Iron Ore taking a breather, it goes without saying that our Iron Ore bellwethers on the Oz markets, BHP Group ((BHP)), Rio Tinto ((RIO)), and Fortescue Metals ((FMG)), are also having a breather. Yet if we have our analysis correct here, as soon as Iron Ore completes its Wave-4 and starts heading higher again, these three big guns will also likely follow. Keep an eye on them.

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).

This report may contain advice that has been prepared by The Chartist Pty Ltd (ABN 40 641 323 051). The Chartist Pty Ltd is a Corporate Authorised Representative (CAR No. 1282007) of Shartru Wealth Management Pty Ltd ABN 46 158 536 871, AFSL 422409. Any advice is considered general advice and has been prepared without taking into account your objectives, financial situation or needs. Because of that, before acting on this advice you should therefore consider the appropriateness of the advice having regard to your situation and your own objectives, financial situation and needs. We recommend you obtain financial, legal and taxation advice before making any financial investment decision. If the advice relates to the acquisition, or possible acquisition, of a product (other than a security e.g. a CFD) then the client should obtain the relevant Product Disclosure Document and consider it before making any decision about whether to acquire the product. Past performance is not a reliable indication of future performance. This material has been prepared based on information believed to be accurate at the time of publication. Subsequent changes in circumstances may occur at any time and may impact the accuracy of the information.

Risk Disclosure Statement

THE RISK OF LOSS IN TRADING SECURITIES AND LEVERAGED INSTRUMENTS I.E. DERIVATIVES, SUCH AS FUTURES, OPTIONS AND CONTRACTS FOR DIFFERENCE CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CAREFULLY CONSIDER YOUR OBJECTIVES, FINANCIAL SITUATION, NEEDS AND ANY OTHER RELEVANT PERSONAL CIRCUMSTANCES TO DETERMINE WHETHER SUCH TRADING IS SUITABLE FOR YOU. THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN FUTURES, OPTIONS AND CONTRACTS FOR DIFFERENCE TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL OF THE RISKS AND OTHER SIGNIFICANT ASPECTS OF SECURITIES AND DERIVATIVES MARKETS. THEREFORE, YOU SHOULD CONSULT YOUR FINANCIAL ADVISOR OR ACCOUNTANT TO DETERMINE WHETHER TRADING IN SECURITES AND DERIVATIVES PRODUCTS IS APPROPRIATE FOR YOU IN LIGHT OF YOUR FINANCIAL CIRCUMSTANCES.

Technical limitations If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.

FNArena is proud about its track record and past achievements: Ten Years On

Click to view our Glossary of Financial Terms