City Trades: Rio digs itself a hole

TRADING IDEA: The mining giant's share price could soon be undermined further

July 13, 2010

A large topping pattern spells trouble in store for Rio Tinto, says Richard Perry at Central Markets.

IC TIP: Sell

If it drops below 2751p, this pattern will be completed and bigger losses will ensue. Its recent failure to get past its falling 90-day moving average and a bearish reversal-day suggests the sellers are poised to regain control. Go short targeting 2751p and then 2631p. A move above 3529p would negate my bearish view.

IC Trades are written by Investors Chronicle writers. City Trades are written by selected external contributors. Both are based on the interpretation of patterns on a share price chart, rather than on fundamental analysis of the company's business or prospects.