With the general commodities theme currently occupying markets, we thought it was time to include Rio Tinto (RIO.ax), one of the more significant resource-driven stocks from the ASX 200, as our Chart of The Day.
On the candlestick chart above, we’re looking at the weekly time frame as it best represents the longer-term trend that is currently bullish. The blue lines are yearly pivot points, which have proved to be a useful indicator in recent years, either as price support or resistance. Price action favoured these levels more so back in 2018 and 2019 as support, but note how even the current year level of 95.00 is carefully respected, particularly during the early pandemic months.
What initially stood out on this chart is not only the validated bullish trendline but the formation of a triple top reversal pattern around the 107.90 regions.
Due to this triple top, sellers may argue that price action has already had too many significant attempts to break above 107.90 and in-turn will identify a price drop as a lesser path of resistance. While this argument has merit, it seems to conflict with other important technical indicators.
For example, the point and figure chart for Rio below clarifies these three attempts from a supply & demand viewpoint. Notice that following the first two attempts to close above 105.00, the supply level immediately outpaces demand, thus nullifying the move each time. However, after the most recent test of 105.00, supply barely changed before demand increased once again. It suggests a greater appetite for Rio shares and explains why we still see this bullish trend unchallenged.
For those interested in trading RIO as a share CFD, Go Markets has this stock and many more, including companies from the ASX, NYSE, and the NASDAQ.
Note: Click on charts to enlarge.
By Adam Taylor CTEe
Sources: Go Markets, Meta Trader 5, TradingView, Bloomberg
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