Rio Tinto – Technical Analysis Update

Rio Tinto Australia is a very popular share to trade among professional and non professional traders, as it is one of the biggest market mover of the Australian ASX Index. The company share price have recently been struggling due to global slowdown and commodity prices and even more recently, investors are concerned where will RIO TINTO share price will go with the end of the mining boom in Australia.

Rio Tinto comprises five principal product groups:

Aluminium:  their facilities include high quality bauxite mines and alumina refineries, as well as technologically advanced primary aluminium smelters. Aluminium products range from cookware to bicycles, refrigerators to aeroplanes. Light, strong, flexible, non-corrosive and infinitely recyclable – aluminium is one of the world’s most widely used metals.

Copper: Is found in nearly every home and vehicle, and in parts and appliances vital to infrastructure and technology development. Rio Tinto claims to have one of the world’s largest and most productive copper assets.

Diamonds & Minerals: Include  mineral such as borates, titanium dioxide feedstocks, high purity iron, metal powders, zircon and rutile which are used in everyday products from paint and sunscreen to flat screen televisions and engagement rings.

Energ: Rio Tinto is an important producers of thermal coal, used for electricity generation in power stations, and of coking coal for steel making. Rio Tinto is also a major producers of uranium which is used exclusively for the generation of nuclear electricity.

Iron Ore: Rio Tinto is second largest supplier to the iron ore market which makes steel for industrial and infrastructure use.

Rio  Tinto is also the world’s largest salt exporter, producing industrial salt for the chemicals industry.

Besides been a major player in the industry Rio Tinto share prices have been rather volatile and is exactly the same reason of been a major player, that expose the company share price to daily movements. Rio Tinto share price reflects demand, growth and commodity prices. It is like an economy barometer.

With the end of the mining boom in Australia, will come the end of Rio Tinto super production and will start a new phase servicing productivity growth. Perhaps will need to fire thousand of miners and take to the next level their support groups  Exploration, Technology and Innovation. Most probably, it will have to take over business focus in other areas of the industry and became a more versatile company.

Rio Tinto have continue their buy back share program, which will help their share price and even the company if they ever need to rise cash to invest.

Technically, the chart could be a long way from showing Rio Tinto future value but the main thing to have in mind is that the company is solid and if well manage, have the monetary means to get through difficult times, surely coming ahead.

In the short term, the chart has a support and resistance between $53 and $59 in the daily chart. An old round bottom seen to be forming a pattern. Which is a long-term reversal pattern that signals a shift from a downtrend to an uptrend. This six months old pattern if true, shall end around the $65. In addition the volatility is at the lowest compare to more recent data. Low volatility could be a good signal when it coincide with a new change in trend. Financial institution recommending the stock average to 5 from an scale of 1-10. Few months ago the average recommendation was 8.

The company will continuous to be a favorite between traders for short term trading. As far as the company doesn’t update investors, about the future direction for the company beyond the boom days, investors will keep cautious and the share will sooner rather than later, reflect the company real value.

In the mean time Rio Tinto Australia has lost 49 point to $57.06

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