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Is Rio Tinto Share Price Poised For a Major Upside?

Copper Price

Despite opening today’s trading session with a huge gap-down, Rio Tinto’s share price is showing strong signals of continuing the bullish trend that saw it close last week with a gain of 4.67 percent. 

The current bullish push comes amidst news that Rio Tinto may be acquiring a 49 percent stake of Turquoise Hill Resources (NYSE:TRQ). The acquisition will see Rio Tinto own 66 percent of the giant Oyu Tolgoi mine in Mongolia. The Mongolian government owns the remaining 34 percent. 

The Oyu Tolgoi mine is believed to have one of the world’s largest copper and gold deposits. Therefore, the acquisition has been seen by many investors as a good investment that is likely to result in high future returns. 

Rio Tinto Share Price Analysis

After finishing last week with a price gain of 4.67 percent, Rio Tinto’s share price has opened today’s trading session with a huge gap-down. Despite this, the past few hours have been aggressively bullish, pointing to a likelihood of today’s trading session closing above Friday’s 4896p closing price. 

However, I expect the rebound to be short-lived, and in the next few trading sessions, we might start to see Rio Tinto’s share price trading in a bearish trend. Part of the reason for my analysis is, despite the UK’s Office for National Statistics (ONS) changing its GDP growth data from a contraction of 0.1 percent to an expansion of 0.2 percent, and hence negating earlier reports by the Bank of England that the UK had entered into a recession, the fear of a recession is still evident across the country. Therefore, there is still a possibility of a broad market selloff, which is likely to see Rio Tinto prices going down. 

My technical analysis also shows Rio Tinto’s share price going down, despite last week’s aggressive bullish push. There is a high likelihood that we might see prices falling below the 4,700p price level in the next few trading sessions and hit the lower trend line of the ascending channel. However, a trade above the 5,000p price level will invalidate my bearish analysis.

Rio Tinto Daily Chart