Fortescue Metals Group Forecast

Fortescue Metals Group Forecast

The Australian company shipped 44.7 million tonnes of iron ore in the June quarter, a 13% increase from the March quarter and a 3% rise from the same time last year. The company shipped 170.4 million tonnes in the 2017 fiscal year and is aiming to maintain shipments around the same level in 2018.

Cash production costs fell to a record low cost of $12.16 a tonne, which is a 15% year-on-year improvement. Fortescue is aiming to cut its cash cost of production, known as C1 costs, to between $11 a tonne and $12 a tonne in the 2018 fiscal year.

Analysts focused on the prices the company was able to realize for its iron ore. Fortescue’s ore is lower grade and it sells at a discount to the industry benchmark which is based on ore with 62% iron content.

The company’s average realized price in the 2017 fiscal year was 77% of the benchmark price but the average realization on contracts inked in the June quarter was 73%.

Technical Analysis

Overall, the bias in prices is: Upwards.

Short term: Prices are stalling.

Intermediate term: Prices are trending.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 5.31.

The projected upper bound is: 5.81.

The projected lower bound is: 5.05.

The projected closing price is: 5.43.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 22 white candles and 26 black candles for a net of 4 black candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 78.9941. This is not an overbought or oversold reading. The last signal was a buy 3 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 59.92. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 58 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 95. This is not a topping or bottoming area. The last signal was a buy 3 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 6 period(s) ago.

Rex Takasugi – TD Profile

FORTESCUE FPO closed up 0.180 at 5.420. Volume was 103% above average (neutral) and Bollinger Bands were 52% narrower than normal.

Open   High     Low      Close    Volume
5.310   5.475    5.280   5.420   45,182,200

Technical Outlook
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish

Moving Averages: 10-period      50-period      200-period
Close:                       5.24                5.02                5.75
Volatility:                47                   48                   55
Volume:                  21,774,252    22,564,682   20,565,336

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FORTESCUE FPO is currently 5.7% below its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of FMG.AX at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on FMG.AX and have had this outlook for the last 23 periods. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.

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Ivy Heffernan

Ivy Heffernan, student of Economics at Buckingham University. Junior Analyst at HeffX and experienced marketing director.

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