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.

Good Money Guide Featured Providers

Trading Investing Spread Betting Currency Transfers CFDs

Visit IG Visit HL Visit ETX Capital Compare Quotes Visit CMC Markets
Looking for an institutional broker? Compare prime brokers here