Rio's result beat expectations yesterday with the company doing a good job on cost control and balance sheet management. However, it's operating in a difficult environment with significant downside risk to commodity prices and future revenue. So a better than expected result but ongoing risk, suggests the current rally will be limited. Here are some thoughts on possible chart objectives.

The first level was reached this morning and is shown on the Rio Tinto chart below. There is a minor  ab =cd pattern at around $54.20. This would also complete a butterfly terminal pattern. This can be an effective reversal pattern and is basically an abcd correction that overshoots with the last leg flicking a bit higher to a Fibonacci level a bit above the recent major peak. This morning's weak looking red candle with the current price below the open makes this look a possibility at this stage. However, confirmation would require the market to stay below today's high and start to make lower lows ideally below the support at "b" which is at  $53.28.

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If the rally gets going again then the next resistance looks to me to be around $55.10-$55.60. Here the larger AB = CD pattern  (labelled in black on the chart below) coincides exactly with a 61.8% Fibonacci retracement of the last major swing lower. This is the text book version of a Gartley 222 sell set up. Just above that is the potential resistance of the last major low around $55.60

Finally if price motors through the second resistance the 200 day moving average could come into play around $57.  This is around 6% above current levels and Rio might require good news on the iron ore price to make it that far.

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