Bargain Hunters Interest For Champion Iron?

This story features CHAMPION IRON LIMITED. For more info SHARE ANALYSIS: CIA

The buyers have returned for beaten down shares in Champion Iron ((CIA)), the Chartist reports, but can this become more than just a temporary bounce higher?

Bottom Line

7/5:
Daily Trend: Up
Weekly Trend: Down
Monthly Trend: Down
Support levels: $3.94
Resistance levels: $8.12 $8.75

Calendar Events:
Report Date: May 27 2025 (estimated)  Ex-Div Date: T.B.A

Technical Discussion

Reasons to be more bullish:
-Planned maintenance programs and the impact of bad weather have affected production.
-Record sales were accomplished as the company drew down its elevated inventory.
-A strong liquidity position of CA$606m.
-Higher grades to improve realised prices is likely in 2026.
-Sitting at the lower boundary of a multi-year trading range.

The lower boundary of an ascending triangle had been overcome during our last review. The best-case scenario was to view it as a false break (fakeout), yet it was not to be.

The leg higher needed to kick in immediately, but it didn’t transpire. Instead, price has continued to head south.

Since our last look at the stock, price has declined by another -25% down to the recent pivot low. That’s the bad news.

The slightly more encouraging situation comes on the back of the bounce over the past few weeks. It’s not enough to move us to a bullish stance, but at least a few buyers have stepped up. I’ll talk about the recent turnaround in more detail below, as there is a potential tailwind in play.

There’s no doubt that plenty of patience has been required with this stock over the past few years. In many ways, it’s a similar looking chart to the likes of BHP, RIO & FMG, to name just a few.

All have been treading water since 2021, albeit it would be fair to say this company has more work to do than most.

The lower boundary of the ascending triangle we’ve been watching has been overcome, so that pattern has been invalidated. It’s not the end of the world, but as we can see, the company is sitting at the lower boundary of the large trading range.

Buyers recently stepped up right on cue, so if there is to be a leg higher, it would be the perfect time for it to kick in. Should that transpire, we’ll be looking for price to head to the upper boundary of the trading range circa $8.65.

That doesn’t look too impressive on this weekly semi-log chart, but it offers a solid percentage gain from current levels.

Volume attributes have improved recently, though that’s better viewed on the daily chart (not shown). What I particularly like is that on the run-up to the low made on the 9th of April, volume increased substantially.

That’s always a reason to sit up and take notice. More importantly, it remained elevated as price started to turn around. We can’t quite call it a volume bubble, but it’s positive, nonetheless.

The consolidation over the past week or so has been coupled with substantially lower volume, which is fine. However, if a decent trend is to develop, it’s important that it increases again during strength.

Trading Strategy

As is usually the case, the direction taken by CIA will be affected by the price of iron ore. It’s not the be-all and end-all, but it’s difficult to envisage a strong and impulsive leg higher if it remains lacklustre.

One thing is for sure, it remains under pressure and is hovering around the lower boundary of a trading range.

If you are aggressive, look for a higher swing low pattern over the coming weeks as it would offer an opportunity to jump on.

Just bear in mind that the upper boundary of the trading range will likely be acting as multi-year resistance. As such, any forthcoming trend could be reasonably short-lived.

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.

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