Technical Analysis of Rio Tinto Share
Rio Tinto is of course one of the world’s largest mining companies. It mines a large variety of metals and minerals, including diamonds, gold, silver, and iron ore.
If we look at Fig. 10.31c, we see that Rio Tinto is currently trading at the same price it was trading at roughly three months ago at the beginning of August 2011.
Between then and the end of September, it was mainly downhill for the share. It stayed below the 28-day SMA for most of the time and the few occasions on which it did venture above the average, it turned around and headed south again almost immediately.
At the beginning of October, we saw a reversal of fortunes for the share. We had a number of up days in a row, causing the share price to break through the 28-day SMA. After that, we saw a negative price correction during which the price dropped below the SMA again, but it soon recovered.
During the last week, it has broken through the 28-day SMA once again and the last two trading days saw a particularly strong effort by the bulls to push the price upwards.
Right now, we are definitely in the middle of a short-term bull run. We have seen a new short term high and the SMA has also started levelling out.
Before rushing into a long trade, however, keep in mind that on a yearly basis we have still seen a negative return of 8.6 per cent on the share price.
We will probably soon see a dip in the price when traders start to take profit. Once that is over and the price resumes its upwards movement, going long becomes an attractive option.