Way back on July 17, we wrote about Rio Tinto plc (RIO) . We recommended: "Traders could go long RIO at current levels and on strength. Risk a close below $57 for now. Our targets range from $71 to $81 so far."
Prices reached our target of $81 by early January but soared as high as $92. RIO has since declined and the picture has weakened.
In this daily bar chart of RIO, below, we can see that the picture has weakened. Prices have broken below the cresting 50-day moving average line as well as the early February price low. The On-Balance-Volume (OBV) line is pointing down and tells me that sellers have become more aggressive. The Moving Average Convergence Divergence (MACD) has moved below the zero line for an outright sell signal.
In this weekly Japanese candlestick chart of RIO, below, we can see how the picture has become bearish with a string of red (bearish) candles. Prices have fallen quickly and could soon test the rising 40-week moving average line.
The weekly OBV line has turned lower and the MACD oscillator just crossed to a take profit sell signal.
In this Point and Figure chart, below, we used daily close only price data. Here the software is projecting the $63 area as a potential price target.
Bottom line strategy: I truly hope that readers of Kamich's Korner on Real Money took profits on RIO at our $81 price target or higher. If you did not sell out your position I would do so now. The tide has turned.
