In my last update, on 22 April 2013, I upgraded the shares to neutral, having earlier achieved my minimum downside target of 2904p.
Rio Tinto’s share price subsequently tested lower levels, and eventually fulfilled a classic Gann-theory correction of 33.33%, as measured from its secondary high in February 2013. However, the major support lies in the band 2660-2695p – as defined by the tightly aligned G1 and G2 lines – and the short-lived blip beneath that support was just a tease. I have also added a three-day swing chart to today’s chart. This highlights the triple-bottom that has formed around the G1 level over the past three years.
The share price has gained some momentum recently, and in mid-January completed a 33.33% rise from last year’s low. Minor resistance created by that 33.33% line (at 3438p) is isolated, however, and the recent break above 3268p clears the way for a further push higher. Traders should now look to an upside target at 3631p. A break above 3438p will provide the trigger for the shares to rise directly to this level.
Recommendation: trading buy. Target 3631p (or the AUD equivalent for Australian readers). Stop-losses can be activated on a break below 3180p.