The iron ore chart is again at a critical level while a head and shoulder pattern has emerged on the Rio chart The good news is that Australia’s iron ore exports to China during July were up 33.5% year on year.  China's exports have also had a healthy recovery in recent months which will be supportive for the economy The bad news is that iron ore prices are again under pressure. The big miners are pressing on with their strategy of increasing sales at the expense of margin; China's property market is in the doldrums; the August Flash PMI was surprisingly weak and reports are that financing criteria for iron ore inventories continue to tightening. All this has seen the Tjianjin price back down to $90 making a break below the June low of $89 a near term possibility.

Iron Ore Chart

Iron Ore Chart Daily Iron Ore Chart Daily

From a technical point of view, the latest rally in iron ore has only been shallow, well below a 38.2% Fibonacci retracement. This creates at least an outside hope that we might make another low around $89 with a double bottom type formation that could yet see a larger upward correction towards $100.50/$104 per tonne Realistically though, an ongoing move below $89 would look like the continuation of an impulsive downtrend in iron ore

Rio Tinto Chart

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Despite Rio Tinto’s profit result getting a big tick from investors, a head and shoulder pattern has developed on the chart since it went ex-dividend. This morning the share price is testing the neck line support of the head and shoulder. A clear break below this would be a short term bearish indicator that would bring the 200 day moving average and 38.2% Fibonacci retracement level around $63.75 into play for starters