FMG fell nearly 50% from its July peak in response to big drops in the price of iron ore. The stock made a double top which suggested price could fall to $11.20 - so potentially it could still head lower. Price has recently made a buy signal by breaking above the downtrend created by the prior strong fall.
14 July 2021
FMG isn't a stock I bother watching much - as the date of my last post below atests to. Its moves don't seem to suit my short/medium term trading style. Anyway, I noticed that FMG's price has made a passable but not perfect pennant pattern and I bought in earlier this week when price broke up out of that pattern. I normally like to have a solid price target but with this pattern I've only been able to come up with a wide range of $30 - $34. Price has been constrained within the shaded price channel for about 5 years so it could be expected price, if it were to rise, would run out of puff around the channel top boundary near $30 - so that's my best guess. Price really needs to break and close above $26.40 for this potential target to be confirmed but where I see a pattern I like to get in early if I can (while acknowledging) my entry has some risk.
Price usually fall back to the lower boundary of a price channel after it falls from the top boundary and a bounce back to the top doesn't fit that profile - ie price could simply turn and fall away. On a more optimistic note, a retest of the top boundary before a bigger pullback is certainly possible. The long term outlook is probably in the hands of the Chinese. If they decide to penalise Australia further by constraining iron ore purchases (and perhaps knowingly shooting off a couple of their toes in the process), then certainly the miners will take a big hit in price.
Anyway, as a short term trade FMG look pretty good at the moment.
16 August 2020
And just to prove I should have trusted my analysis - see how price achieved the higher target referred to in the two posts below. Should have held!!
24 July 2020
FMG was sold after only being purchased last week. Price reached target (isn’t it magic how the week’s high was precisely on the money?) only to make a candle that could suggest price could fall back a bit. My rules are to sell at target and that what happened for a 4.2% profit. The return was materially less than my usual winning trades but a profit is still a profit! There is a second higher Gann target at $18.17 but with that being outside of FMG’s price channel I wasn’t prepared to see if that materialised in these erratic trading times.
17 July 2020
FMG (like BHP) has been buoyed by news of improved iron ore sales. The stock has risen strongly since the March lows , making a resistance break pattern on Monday after also confirming an uptrend line and higher lows and highs. The pattern has a target of $16.85. FMG’s Elliott Wave count is also unclear but I can see an argument that it could be on Wave 5.
