The iron ore price will be crucial to Australia's terms of trade over the medium term and has a big influence on how people see the outlook for  Aussie Dollar, the Australia 200 index and major resource stocks.

Given the recent sharp drop in prices, I thought this might be the time to update my March posts on the chart outlook.

Daily Chart

We are now at the bottom end of what might be a critical support zone for this chart (dashed red lines). A move below this level would represent an overlap below previous highs, making a long term bearish bias the safest interpretation of this chart it seems to me

I can't say, I'm overly confident about the red swing counts I've put on this chart. However, a move below the dashed support lines suggests either a bearish scenario in which we ultimately move under the previous low or, at the least, an ongoing correction of the major rally up from "3'" to "4".

If the current support is broken, I would then need to see a rally above the dashed black line at $133 per tonne to change my bearish bias.  That would start to look like a possible ABC correction and would take us clearly back above the 200 day moving average as well.  At this stage any rallies that fall short of $133 are more likely to be corrections against the longer term downtrend

Iron Ore 62% Fines - Tjianjin Port. Source: Bloomberg Iron Ore 62% Fines - Tjianjin Port. Source: Bloomberg