RIO closes above its opening price after recovering from early selling pressure
Rio Tinto Plc (RIO) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
RIO finished the month 8.65% higher at 61.04 after flat today on high volume, underperforming the S&P 500 (0.77%). Trading up to $0.47 lower after the open, Rio Tinto managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (RIO as at Jul 31, 2020):
Friday's trading range has been $0.83 (1.37%), that's slightly below the last trading month's daily average range of $1.00. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for RIO.
During the whole day, prices traded within the prior day's range, unable to trade above the previous day's high or below the prior day's low forming an Inside Bar.
Prices are trading close to the key technical resistance level at 61.22 (R1). After having been unable to move lower than 60.13 in the previous session, the share found buyers again around the same price level today at 60.24. The last time this happened on July 16th, RIO gained 1.59% on the following trading day.
Although the market is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Selling might speed up should prices move below the nearby swing low at 60.13 where further sell stops could get activated.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Bullish Intraday Reversal" stand out. While it is usually interpreted as bullish, it has actually shown to be bearish for Rio Tinto. Out of 434 times, RIO closed lower 52.76% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 55.30% with an average market move of -0.17%.