RIO likely to fall further

RIO found support at the 38.2% retracement level (May '10 low to Feb '11 high) but in my opinion it is likely to fall further. The 50% retracement level ($73.50 or so) looks the most likely target. Timing wise I am looking at mid to late April. If that fails to hold we could be looking at a fall to the mid $60s. Of course this could all change very quickly. Will keep you posted.

RIO hangs on by fingertips

RIO is on the verge of breaking below a long term uploping trend line.

RIO in the 'red zone'

The chart below shows daily bars painted red and blue. Statistically this means little particularly on the RIO chart. But there is one thing you can be certain of. The share price will not fall dramatically while the bars are blue - mainly because once they fall far enough the bars will turn red. The converse is also true. When the bars are red, there is the possibility (not necessarily a probability) that a large decline can take place. The second chart below shows the decline for the period May - September 2006. Essentially it is meant to highlight that following the red bars would have kept you out of the market during the entire decline. Such a strategy would enable you to avoid a '2008 type' severe decline which - in case you have forgotten is shown in the third chart below.

40% on RSI is important support

For over 2 years, the 38-42% line on a 12 day RSI has provided support for the RIO share price on no less than about 12 occasions. Only twice has that zone failed to support the price. On one of those occasions, the price fell another $8 ($73 to $65 in Jan 2010). The other time it fell another $17 ($76 to $59 in May 2010).



Click to enlarge.

RIO falls below trendline support

Today, RIO broke below trendline support, but here's an interesting observation. The first chart is drawn on an arithmetic scale, the second on a semi-log scale. On the arithmetic scale, the trendline support was only broken today. But on the semi-log scale it broke the support a month ago and since then the rally has failed to break back above the trendline.

Arithmetic scale.
Click to enlarge.

Semi-log scale.
Click to enlarge

RIO share price looking ominous

RIO looks like it is at the end of the 4-month sideways consolidation pattern. My trading system gave a buy signal 2 days ago. That signal often precedes a trendline break giving advance warning of an impending move. RIO gapped above a minor trendline yesterday. My guess is it will charge through the last level of resistance shown on the chart. If it does, the minimum target is $98 with $108 a good prospect and $120 certainly not out of the question.
Click on chart to expand