Rio Tinto gains upside momentum

Price at time of writing: 3382p.

It is some months since I last discussed Rio Tinto, and it is time we revisited one of the most important and influential global mining companies.

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.

Rio Tinto chart

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.

Find articles by analysts