The global metals and mining company Rio Tinto Plc (RIO) has a set of strong charts. It recently made an upside breakout so let's set a strategy to capitalize on this upside move.
In this daily bar chart of RIO, below, we can see that prices retraced their coronavirus decline and have broken above the January highs. Prices are above the rising 50-day moving average line and the rising 200-day moving average line. The 50-day line crossed above the 200-day line earlier this month for a bullish golden cross buy signal. The signal comes well off the March low but can be very effective in long-trending markets.
The On-Balance-Volume (OBV) line has been rising since late March and is close to making a new high for the year. A rising OBV is a bullish clue and tells us that buyers of RIO have been more aggressive.
The Moving Average Convergence Divergence (MACD) oscillator just crossed to the upside for a new go long signal.
In this weekly bar chart of RIO, below, we used a five-year chart to show that prices have broken out of a large consolidation pattern from $45 to $65 (the pattern is "neater looking" if you put your thumb over the weakness in March). Taking the height of the pattern - $20 - and projecting it upwards from the breakout at $65 gives us an $85 price target. Prices are above the rising 40-week moving average line.
The weekly OBV line has been rising and is close to making a new all-time high. The MACD oscillator is bullish.
In this Point and Figure chart of RIO, below, we used daily price data. You can see the recent upside breakout and a $71 price target.
In this second Point and Figure chart of RIO, below, we used weekly price data. Here we can see an $81 price target.
Bottom line strategy: Traders could go long RIO at current levels and on strength. Risk a close below $57 for now. Are targets range from $71 to $81 so far.
