“As we have been saying for a while, when everyone hates resource stocks, and everyone is bearish on China and commodities and the hedge funds have their largest short positions in eight years, then you need to be ready for a big countertrend move,” Michael says.

“The market is finally realising this as commodity stocks bounce hard due to Chinese stimulus and US rate cuts.

“Similarly to the reversal that we identified with MIN two weeks ago, FMG has also reversed strongly off the lows.

“This has triggered a buy signal along the way on the weekly RSI (circled), which is the same signal that we saw in 2021.

“Price action has also looked very strong, even before the announcement of Chinese stimulus. “We expect that the strong recovery will continue from here and any dips are a buying opportunity.

“The next major line of resistance is near $24 which still leaves plenty of upside for those thinking that they have missed the boat,” Michael maintains.

Fortescue (FMG)

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