If you’ve read MacroBusiness Morning, you’ll know that iron ore prices fell last night. In the past couple of weeks, the ore price has retraced modestly some 4.4% to $142.70. I’ve asked The Prince to give me a technical take on the bulks and the news is not all that great.
First iron ore:
There are some chart factors here that suggest all is not well. We’ve seen a possible trend break on the chart and it is also clear that the price is having difficulty getting above its 200 day moving average, which acted as a base for the prior bull market.
We do have a series higher lows in place, suggesting good buying support on the dips but unless this market can clear the $150 intersection of the 200 day moving average and the top of the ascending triangle, iron ore is likely to stay in a bear market. This is born out even more clearly by 12m iron ore futures:
Still, iron ore still looks a lot better than coal. Thermal especially looks bad:
Thermal coal is in a clear downtrend with lower lows and just crossed the 200 day moving average going the wrong way. Look out below. Coking coal has held up better, establishing a base somewhere above $200.
The good news is that the falls Australian dollar are keeping pace with these declines at the moment so I don’t to this point see any material further deterioration in the trade balance from the export side.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
