Technicals | May 17 2023
This story features BHP GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: BHP
Bottom Line 16/05/23
Daily Trend: Up
Weekly Trend: Down
Monthly Trend: Down
Support Levels: $80.00 / $54.40
Resistance Levels: $128.86 / $161.84 / $186.50
[All prices US$/t]
Reasons to remain neutral:
→ Chinese demand is always being monitored
→ relentless production by the majors is still in force
→ larger higher degree multi-year [A]-[B]-[C] move north high point could be significant at $219.77 in July 2021
→ downside move off the 2021 highs has now proven to be zig-zag in nature with a bounce potentially now in play.
Ok, we are sticking to our optimistic longer-term view on Iron Ore be it the larger move is expected to be corrective in nature only with sporadic periods of impulsive price action along the way to get us excited every now and then. The overall labeling we are continuing to propose here is via a higher degree double zig-zag move to the upside.
So the [A]-[B]-[C] move that completed back in July 2021, followed up by a higher degree Wave-[X] which completed back in November 2022 down toward $80.00 support. With price now embarking on another higher degree [A]-[B]-[C] move that will subdivide via a series of lower degree patterns and therefore be multi-year in the making.
The above aligns with our ongoing longer-term analysis, yet it has to be said that we will bury this bullish outlook deep in the earth if $80.00 is broken below with conviction at any stage. So $80.00 support is critical. The bounce off $80.00 was impulsive to the upside which is certainly a positive and we have labeled this move as an intermediate Wave-A.
With the breather to the downside being a Wave-B which should now be close to maximum depth. So if we have our positioning of the trend corrective on the immediate lower degree counts, a Wave-C equality move to the upside should be very close to taking hold from here. And the equality move we will be looking for over the coming months will be targeting the $154.00 zone.
Then if and when the $154.00 target is attained, we will be locking in a higher degree Wave-(A) with a higher degree Wave-(B) breather to follow from there. There is really no point looking further ahead than this, so let’s just see if price can follow the immediate script from here as we continue to take things just one step at a time for now.
Price is well oversold on the weeklies as well so buyers should be getting close to taking a look at this again over the next week or two. We will continue to monitor.
The recent dip in Iron Ore prices has had all the likely suspects pointing south. BHP Group ((BHP)), Fortescue Metals ((FMG)) and Rio Tinto ((RIO)) combined with some of the small to mid-caps like Mt Gibson Iron ((MGX)) and Champion Iron ((CIA)).
Yet they are the ones to watch if price action starts to turn north again from here which is our ideal scenario. They may only be shorter-term type trades based on our immediate analysis so I wouldn’t be falling in love with anything right at this juncture.
So trail your stops vigilantly and keep things tight if you decide to get involved. Of course, this is only on the condition that Iron Ore prices start to turn for the better again!
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For more info SHARE ANALYSIS: BHP - BHP GROUP LIMITED
For more info SHARE ANALYSIS: CIA - CHAMPION IRON LIMITED
For more info SHARE ANALYSIS: FMG - FORTESCUE METALS GROUP LIMITED
For more info SHARE ANALYSIS: MGX - MOUNT GIBSON IRON LIMITED
For more info SHARE ANALYSIS: RIO - RIO TINTO LIMITED