Rio Tinto looks for glimmer of hope

Price at time of writing – 3536.5p.

On 11 February I recommended a ‘trading buy’ on shares in Rio Tinto, with a target set at 3631p (a 7.36% upside from the then price of 3382p). 

This target was fulfilled on 18 February and, as a result, the recommendation for Rio Tinto now reverts to neutral.

Completing the move to 3631p has seen the shares return to a resistance band defined as 3631-3649p; the most notable of the percentage lines which cluster within this band being the one marking a 100% rise from the secondary low in July 2009. As I mentioned in the last update, the recent break above 3268p provided the trigger for the shares to rise directly to this level.

A further pull-back to isolated resistance at 3438p can now be expected. Strong support at 3438p would provide a glimmer of hope that the shares will ultimately look to push above 3631p, most likely following some sideways trade around the band noted above. Any such break above 3649p would require me to introduce a new upside target centered around 4298p. This may take a little time to develop, however.

Recommendation: neutral. Traders may look to buy any further dip to 3438p.

Rio Tinto chart

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