Using the fundamental approach, there have been a couple of upgrades in the last few weeks based on higher iron ore price forecasts, including one yesterday from RBS Australia which has a target stock price of $6.41.
On the FnArena website today there is also an article from their technical analyst, techwizard, pointing out a bullish consolidating triangle after a breakout.
It's not the sort of approach, or at least descriptive language, that I normally use but I agree that the chart looks good.
The way I would describe it is that there was a powerful breakout in early January, a wave 3 surge, and a long choppy correction has held above the breakout level of 440 with some very minor overlap. The corrective pattern may have further to run but I'd certainly be interested at buying some stock on a break of 495. Once the stock gets moving then standard wave counts would give you a projected price in the range of 600 and the move could be reasonably quick although it's hard to imagine it being as rapid as the January move.
Click to enlarge
The relative underperformance of the stock was starting to baffle me but yesterday 2% of Fortescue changed hands as a large shareholder, Leucadia, reduced their holding from 10 to 8%. I've no idea whether they're an ongoing seller and I'll just focus on my technical indicators but it provides a reason to not rush in and try to pre-empt a rally.
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