“Fortescue shares have been hit hard because of the sharp drop in iron ore, but now is not the time to sell them,” Michael said.
“I remain cautious on the market overall, and have sold a number of shares in the last few weeks for my clients, but FMG is not one of them.
“It is interesting to look at the momentum of FMG shares during these past few weeks.
“In the last few weeks, the FMG share price has headed lower. However, if we look at the Relative Strength Index (RSI) for FMG, it has provided us a double bottom (circled).
“This divergence between what the price is doing, and what the momentum is doing, is a bullish sign.
“Many investors would treat this as a buy signal.
“I’d like to see more evidence that the FMG share price has bottomed, but it is enough for me to know that FMG is at least a hold here, and it is one to keep an eye on as a possible buy.
“If the market overall does go down here, which I suspect it will, it will be interesting to see whether FMG shares can hold in and show some strength. If so, that would be an extremely bullish sign,” Michael concluded.
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