Toppy pattern noted in big miners (BHP, RIO, AAL)

Shortage and oversupply are two recurring features of the commodity market. The former drives prices higher; the latter lower.

In recent months, iron ore certainly belonged to the former as Vale’s Vargem Grande Complex mine – a big supplier of the commodity – shut down. Beneficiaries of this included Rio, BHP, and Anglo.

But as Vale resumes operations¬†of the mining complex, investors are now expecting iron ore’s supply-demand equation to return to equilibrium gradually. This removes one big bullish factor on iron ore miners. Results are immediate.

BHP, for example, is developing a medium-term top after a failed upside breakout at 2,050p (see below).


Rio Tinto’s reacted more sharply. Prices gapped down after hitting 5,000p. The stocks is threatening the 150-day exponential moving average (see Featured Chart).

Anglo American too had a failed uptrend reassertion at 2,300p, although short-term support is noted at 2,100p.

This means that the miners’ relentless rise over the past six months could be under threat. I expect choppier trends in this sector as some investors may decide to cash part of their chips.

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