We're Still Digging Rio Tinto -- Here's Why

 | Jul 17, 2017 | 10:55 AM EDT
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It has been a while since we reviewed Rio Tinto ADRs (RIO)  and we were bullish on the stock: "In this Point and Figure chart, above, we can see that a trade at $43 will refresh the uptrend and keep us on track for our longer-term price target of $51."

With hindsight we can see that RIO corrected about $8 to retest the rising 200-day moving average line before firming again. With prices close to making a new high close an update and review is in order.

In this updated bar chart of RIO, below, we can see that prices have turned up above the May and June highs and above the rising 50-day and 200-day moving average lines. The On-Balance-Volume (OBV) line has improved from a June low but is still below its February peak. The Moving Average Convergence Divergence (MACD) oscillator moved above the zero in early June and is still in a bullish configuration.

In this weekly chart of RIO, below, we can see that prices are above the rising 40-week moving average line after tests in April and June. The weekly OBV line is largely neutral while the MACD oscillator has turned up to a fresh go long signal.

In this Point and Figure chart of RIO, below, we can see that a trade at $46 is needed for a double-top breakout and a potential longer-term price target of $59.

Bottom line: Prices look extended in the short-run so some sideways or lower price action would not be a surprise right now. Being extended or overbought does not rule out further gains as a market can always get more overbought. Trade RIO from the long side risking below $43.

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