Iron Ore Price Analysis: Hammered Into Support as Coronavirus Fears Spread Further
Iron Ore Price, Analysis and Chart:
- Iron ore trades at a near three-month low and may struggle to move higher.
- Chart gap needs to be put into context.
Iron Ore Roiled as Sellers Dominate Market Re-Opening
Iron prices were hammered lower as the Chinese markets re-opened after their holiday and hit their lowest level since the double-bottom made on November 8 and November 12. A huge gap has been left on the chart – currently between 597 and 637 – that traditionally would need to be filled. It should be noted however that the penultimate candle on the daily chart was on January 23 before an 11-day holiday gap ahead of the market being re-opened today. Gaps on charts are traditionally expected to be filled, however this price and time gap may prove different.
The chart does show a strong short-term support level around 563 which held on its first test today. A close below here would have seen iron ore trading at a fresh one-year low. If support holds then iron ore is likely to trade in the low 600s in the short- to medium-term before attempting to break above 637. The CCI indicator shows the extreme oversold nature of the market, but again there is a time gap due to market’s closure.
The daily chart does paint a bearish picture with iron ore now trading below all three moving-averages and with the Chinese coronavirus still spreading, the spot iron ore price may struggle to make a sustainable break higher.
Iron Ore Daily Price Chart (January 2019 - February 4, 2020)
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