Technicals | Apr 29 2022
Bottom Line 28/04/22
Daily Trend: Down
Weekly Trend: Up
Monthly Trend: Up
Support Levels: $78.33 / $54.40
Resistance Levels: $180.00 – $190.00
[All prices US$/t]
Technical Discussion
Reasons to revert to neutral:
→ Chinese demand has weakened for now yet may only be temporary
→ relentless production by the majors is still in force
→ larger higher degree multi-year [A]-[B]-[C] move north is confirmed as having completed
→ midpoint Wave-[X] low now potentially locked in although this has yet to prove
As we mentioned in our video there are two ways to interpret the trend now. The first is that the Wave-[C] high that has locked in circa $219.77 is significant. Which means it is not going to be broken above for some time to come. Potentially for many years. The second option is that longer-term price is going to build towards a larger double zig-zag move north unfolding, that will target up towards $275.00 eventually.
So looking at the first option. After a multi-year run north off the 2015 lows via a higher degree 3-wave pattern, there is no reason not to think that we now have a significant high locked in as part of the higher degree Wave-[C] completion. For those that have been following our reviews over the past 12 months, you will know that this has been proposed within our analysis for some time and has remained an option ever since. So basically what this would look like is price action now evolving within a larger sideways consolidation phase. So on a smaller scale, something along the lines of how the Shanghai Composite price chart has behaved ever since the 2007 highs locked into place (see tonight’s review).
The second option is decidedly more bullish. Proposing that what is unfolding longer term is a double zig-zag move to the upside. So with the middle Wave-[X] now in place at the recent $91.98 November lows, price is now going to slowly evolve to the upside via another higher degree [A]-[B]-[C] move. With equality targets measuring up towards $275.00. It’s a valid interpretation of the bigger picture trend as well. We will continue to monitor.
Trading Strategy
‘We could get some decent upside in the Iron Ore sector from here as stated if our counter-trend move north plays out over the coming months. So short to medium term trading plays on the long side may prove beneficial.’
The above from our previous reviews aligned to the Wave-[X] low locking in, continues to hold strong. Even though the weekly chart is well overbought, the daily is oversold. So the usual ASX suspects are always worth considering on the dips if and when any low-risk opportunities start to develop. Such as BHP, FMG, and RIO or even keep an eye on some of the small to mid-caps like MGX.
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