Rio Tinto share price plummets 7.60%: So what happened to Rio?

The Rio Tinto share price was crushed yesterday as the shares went ex-dividend, sliding more than 8.5% at one stage before recovering into the close. In theory, yesterday’s price action has little to do with Rio Tinto’s (LON: RIO) underlying business. The mining giant’s decline came as the dividend payment window closed, meaning anyone who purchased shares from yesterday onwards will not be eligible for the next dividend payment.

However, the carnage has made a mess of the technicals, and RIO has broken down below significant support levels, which might not lead to an instant rebound. Although considering the company’s strong performance due to rising commodity prices, the latest valuation may encourage bargain hunters.

Over the last year, metals prices have screamed higher due to supply bottlenecks and increasing demand. This helped Rio Tinto to its best-ever six-month performance in the first half of this year, leading to the company announcing a whopping $9.1 billion dividend. And that’s why investors sold the shares heavily. Buyers that were holding the stock were now able to sell their holdings without losing the payday. And sell they did.

RIO Price Forecast

The daily chart clearly shows several negative developments. The Rio Tinto share price is now below the three major moving averages. Yesterdays opening trade of 5,700p breached the 50,100 and 200 DMA’s at 6,013p, 6,006p and 5,784p, respectively. Furthermore, the selloff pushed RIO below trend line support at 5,818p.

Forgetting the fundamentals for a moment, the stock must recover above 5,818p for the outlook to improve. Should that happen, the likeliest scenario is a return above 6,000p to the 50 and 100-day averages. And if they are crossed, the price should head back to the August high at 6,342p. However, if the slide continues, the bears will target the March low at 5,274p. And whilst this is unlikely, the chart says that it’s possible.

Rio Tinto Share Price chart (Daily)

Rio Tinto share price

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