While the price of iron ore has been causing a goodly deal of concern in the market in recent weeks the ‘Big Australian’ has been slowly but surely starting to gain a bit of traction with the trader community. All of a sudden not being the biggest iron ore miner may be paying dividends of a different sort. In any case the formation that I have for you today is a really simple one but it doesn’t make it any less potent as a means of gauging the overall mood of the market.
The thing that I always like to see is the ‘gap-breakout’ and we certainly have this here with the price gapping clear over the resistance line. At the same time the price also cleared the 200 day moving average so it was clearly feeling exuberant that day.
On the negative side the trend is still clearly down or sideways if you are feeling a bit more generous. With this in mind you can see that price has previously struggles around the $38 mark so there is plenty more resistance to be seen. Whilst the price holds above the new support level there will be reason to start accumulating on the long side and we will see what the market offers us from here.