RIO Resistance

After a strong run up in the last couple of months, RIO is looking to extend its gains. However, it appears to be running into some stiff resistance around the mid-67 region, which it failed to close above today.

On the weekly chart, RIO is trying to break above the 100WMA by bouncing off its near-term support trendline. Overhanging this level is some strong resistance at around 67.34, as well as a longer term resistance from a long term channel dating back from February 2011, which RIO still seems to be stuck in.

A failure to reclaim ground above the 69.30 recent cycle high set in the early days of 2013 may present a shorting opportunity for bears to strive for a pullback towards the 62.02, the 38.2% retracement of May 2008 highs, even with the 10WMA lurking nearby.

The daily chart shows much the same picture – whilst RIO may well hold above the 67.30s level, there is strong resistance ahead, led by the 50% retracement level of February 2011 highs at 68.71 combined with the resistance from the long term downward trending channel originating from then. The MACD chart shows a possible setup for a bullish signal, which may help fight through this resistance.

Bulls may look for support provided by the 20DMA as well as the support line from the short term upward trending channel from November 2011 at around the lower-66 level. If this support breaks down, it may provide confirmation that RIO is still trapped within the longer term downward channel from February 2011, and bears may next target the 38.2% retracement of February 2011 highs at 63.91.