Iron Ore: Remain Neutral

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

Bottom Line 11/07/23

Daily Trend: Down
Weekly Trend: Down
Monthly Trend: Down
Support Levels: $80.00 / $54.40
Resistance Levels: $130.00 / $161.84 / $186.50

Prices US$/t

Technical Discussion

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 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.

We are back onto the ever-popular Iron Chart tonight and if we can witness a larger higher swing low pattern trigger from here above the Wave-A high on our chart circa $130.49, then we see no reason why price couldn’t make a charge toward $154.00 before taking another decent breather that will likely be multi month in the making. So the next move north, if we do get it, and which should also be a couple of more months in the making from here, could be the last push north we witness for a while.

So from an Elliott Wave perspective, the ideal scenario from here is for an A-B-C move north to continue to unfold. The wave count is complex though and continues to be overall corrective in nature, so there is no way of knowing just yet if our proposed analysis more immediately is going to come to fruition. Yet for now, it is the best positioning of the overall trend that we can come up with.

So as per our video tonight, if a Wave-C to the upside is now in play, these waves frequently unfold as 5-wave patterns within themselves. So if we have a minor degree wave-(i) of C now locked in and a minor degree wave-(ii) breather trying to lock in a low right around present levels, then a swing higher from here above $113.08 may well trigger a wave-(iii) to the upside which should be strongly impulsive as most wave-(iii)’s are.

With the first port of call for this wave to head toward being overhead resistance circa $130.00. On the intermediate level, Wave-C’s frequently lock in an equality move when compared to the Wave-A, with this number targeting up toward our aforementioned $154.00 price point. This analysis is far from conclusive though and won’t be until we have clear evidence that an impulsive wave-(iii) of C is now in motion.

Trading Strategy

Post the weakness that locked in the Wave-B on our chart, 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)) are all up today (Tuesday) between 1-2%.

These stocks tend to be the ones to watch as they do have a correlation with our Iron Ore Chart. So with our bias leaning toward a potential A-B-C move north continuing to unfold short to medium-term, these sector-related stocks will have the potential to see some further buying coming into play shorter term.

This of course depends on our immediate analysis playing out to expectations over the coming weeks as outlined in our review. So worth keeping an eye on for those traders interested in the Iron Ore sector.

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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