Technical Analysis Snap: Rio testing its highs

12th Jun 2009 15:44

This week's announcement of Rio's joint venture with BHP, and the dropping of the Chinalco deal, has undoubtedly boosted Rio's share price, certainly more so than its rivals BHP, which looks to be finishing the week roughly where it started. In addition the continued rise in aluminium, copper and other commodity prices has also served to buoy the company's share price. It appears from the chart above, that the share price is near to a crucial resistance level, and also its highs for the last 6 months.The 3,200p level is a key level for Rio, being that it is its highest level since November last year, and the rallies from its lows of 995p in January have stalled at this key level on at least 3 previous occasions. In May 2008 Rio posted a high of 7,167p, and in the space of 7 months it had lost more than 80% of its value peak to trough.The rally back so far has so far been contained just short of its 38.2% Fibonacci retracement level at 3,352p, with the November 2008 highs of 3,193p containing the up side for now. A break here could signal further buying interest back to the 50% Fibonacci level at 4,081p. However, for now the charts suggest that there is potential for the price to drift back towards support around the 2,738p area. For periodic TA updates follow me on TwitterAlso read my Investors Guide to Technical Analysis and Level 2