Originally published by AxiTrader
Iron Ore defied the doomsayers in 2016 rallying strongly from its lows as Chinese demand itself defied the doom and gloom merchants.
That rally was important for Australian stocks such as the big miners, BHP Billiton Ltd (AX:BHP) and Rio Tinto Ltd (AX:RIO), for stocks like Fortescue Metals Group Ltd (AX:FMG) and for a number of other lesser known names. Indeed the overall ASX 200 index has benefited from the recovery in the materials, and minerals and mining space.
Of course that wasn't just a recovery in iron ore which drove this. It's clear the commodity cycle itself turned in the first two months of last year.
But iron ore is to sentiment about Australia like Tom Brady is to sentiment around the New England Patriots chances of winning Super Bowl 51 today.
So I wanted to share with you a chart I picked up from my old colleague David Scutt from an article he did this morning on iron ore. Scutty is one of the top writers and commentators on iron ore in Australia and he's worth following at BI and on Twitter.
Scutty wrote this morning that:
"Iron ore spot markets were hosed on Friday, tumbling upon the resumption of trade following the week-long Lunar New Year holiday.
And Chinese futures, responsible for the weakness seen in spot and physical markets, continued to slide on Friday evening, hinting that the selloff may have further to run yet."
Anyway, the chartist in me couldn't help but add two great big red lines to his chart of the iron ore price.
You can see the clear pattern that is emerging for the price of iron ore here. It suggests further gains are going to be difficult from here and a period of consolidation/break lower might be coming soon.
If it does it will be important for traders of the AUDUSD, individual mining and material stocks, the SPI 200 and of course the overall S&P/ASX 200/S&P/ASX 300 indexes.
Have a great day's trading.