Iron Ore prices, while having reached decade highs in 2020, have been consolidating in 2021. However, a still elevated iron ore price remains earnings accretive for major miners of the steel making ingredient some of which are looking oversold in the short term. Even for diversified miners, iron ore is often the most significant of the commodities to the earnings of these companies which include Rio Tinto, BHP Group, Fortesque and Vale. In the article below we look at the iron ore price and the top four miners of the commodity assessing possible short-term trading opportunities therein.
The above graph highlights the broad range within which iron ore has been trading throughout 2021. The price looks to be reversing off the 960 support level and out of oversold territory. 1057 becomes the initial resistance target from the move. Should the price instead move to close below the 910 support level, the price reversal and range trade assumptions would be deemed to have failed. A move below 910 would also suggest that the longer term uptrend is instead breaking down.
Rio Tinto
Rio Tinto PLC (LON:RIO) currently finds its share price trading at what appears to be a key level of historical support (5420). Traders looking for long entry might hope to see a strong price reversal at this level, supported by a sharp move out of oversold territory. Should this support level hold and the price reversal scenario manifest, 6105 becomes the initial upside target from the move. A firm close below the 5420 level would however instead target further decline towards the 5085 level.
Vale
The Vale SA - Prf - - ADR (NYSE:VALE) price currently trades mid-range, while the oscillator remains in neutral territory as well. Traders of the company might prefer to look for long entry on a price reversal closer towards the 16.00 support level.
The BHP Group (LSE, ASX & JSE listings)
The BHP Billiton PLC (LON:BHPB) (LSE) currently trades around gap support at 2075, while the stochastic oscillator shows the price to be oversold at current levels. Traders looking for long entry might prefer to see a stronger price reversal from either current levels or closer towards the 2000 level. Along with the price reversal we would like to see added confirmation with a sharp move out of oversold territory.
In this scenario (should it occur), a close below the reversal low might be used as a stop loss consideration for the trade, while 2270 becomes the initial upside resistance target from the move.
The BHP Group (ASX) while oversold, is still in decline (short term) with 44.80 and 43.60 the next downside support targets considered. It is around these levels that range traders might hope to see a bullish price reversal before targeting a move back towards resistance at 47.45.
The BHP Billiton PLC (JO:BHPJ) (SA) similarly to its ASX listed counterpart, remains oversold, although it is still in a short term decline (short term) with 41280 the next downside support target considered. It is around this level that range traders might hope to see a bullish price reversal before targeting a move back towards resistance at 46590.
Fortesque
The share price of Fortescue Metals Group Ltd (ASX:FMG) now trades below gap support at 2105, bringing the 18.70 to 19.20 levels as the next downside support targets. Traders looking for long positions might prefer to see the share price back above 21.05, with a move out of oversold territory to support the suggestion of renewed gains and targeting a move towards the 23.20 to 24.20 resistance range.
