Iron Ore BHP described China’s demand for Iron Ore as “unwavering”.
China continues to follow through with the decision to purchase higher grade Iron ore over the lower grades supplied by the smaller producers (FMG) and others. China's imports of steelmaking raw material iron ore fell slightly in August from the previous months, hit by output curbs on steel mills as the government continues to battle pollution. Imports totaled 89.3 million tonnes for the month, down from 88.66 million tonnes this time last year. Official data from the General Administration of Customs showed that in the year to date, imports hit 710 million tonnes, down 0.5 percent. Steel mills reduced their replenishing demand for raw materials due to continued anti-pollution measures and environmental inspections, import analysts said before the data was released. Utilisation rates at blast furnaces at steel mills across China fell to 66.16 percent in mid-August through September, the lowest level since early April. The country's main steelmaking hub, Tangshan city, said this week it would continue to carry out production restrictions in the remainder of 2018. China's steel exports rose 15.8 percent from a year ago to 5.95 million tonnes in September/October. In a recent update BHP described China’s demand for Iron Ore as “unwavering”, as they continue to ramp up production.
Currently the recent price action shows a small consolidation of price between USD$65 and $68 has occurred. Iron ore pricing is only one of stability. But there is one truism in the markets, that is low volatility leads to high volatility and the opposite is true, high volatility leads to low volatility. As the primary trend remains UP, a high breakout of this pennant pattern would see the $70.00 and $75.00 high retested. A breakdown of price below point 3 at USD $62 would be very bearish. As the primary trend still remains UP a retest of the upper resistance now at $70 - $75 is the better probability. This will underpin producers Vale, BHP and RIO, let’s take a look.
The daily chart of BHP shows support at $32.40 with nearest resistance at $33.10. While the broader Price trend when viewed on the weekly chart is UP, this daily view is showing a recent Bullish piercing candle.
This key reversal line is following on from the a,b,c retracement. The Stop loss is set at $32.30.
Using a position management method of 1% of account, the trade shows that the risk from the $33.10 entry to the stop is 80cents. To create a position size divide the 80 cents into 1% of the account size, this will give a correct position size. In the event the Stop loss is hit, the loss is limited to 1% of account.
The daily chart of RIO displays a descending price pattern, this is often a bullish pattern because it infers constant support while the resistance levels are falling, in this case the support is shown at $76.35 at points 1,2 and 3.
The relative strength Indicator has moved lower in line with this low volatility pattern. The RSI is currently above the key “50” level at 53 indicating positive price momentum. Further rise in the underlying price will only lift the RSI.
The first resistance level and trade entry point is $79.38 with the Stop Loss shown at $76.10 inferring a trade risk of $3.28.
Using a position management method of 1% of account, the trade shows that the risk from the $33.10 entry to the stop is 80cents. To create a position size divide the $3.28 into 1% of the account size, this will give a correct position size. In the event the Stop loss is hit, the loss is limited to 1% of account.
Mount Gibson Iron daily chart shows the constant retracement into the .4475 level of support. Although point 3 made a new low the hammer bar closing price remained above the close at point 2, this current move is a very bullish breakout that has developed resistance at 47.5 cents. In setting a trading position this chart a Stop loss is set at 46 cents. The risk is limited to 1.5 cents. The Relative strength Indicator is shown above the key “50” level, a good sign of further positive price momentum.
Using a position management method of 1% of account, the trade shows that the risk from the $33.10 entry to the stop is 80cents. To create a position size divide the 1.5 cents into 1% of the account size, this will give a correct position size. In the event the Stop loss is hit, the loss is limited to 1% of account.
