Fortescue is well known as a $65 billion Australian iron ore production company founded by Andrew Forrest.
“It had a near death experience five years ago due to high debt and low iron ore prices,” Michael said. “However, the business has turned around and the share price is now 10 times what it was at those lows.
“The share price essentially tracks the iron ore price, and it has been a great trading stock this year.
“In early November, it formed what is known as an island reversal (circled on chart below). “This is a bullish sign and is reminiscent of the lows in March.
“These sorts of reversals often lead to a strong rally.
“A few days later, FMG broke above the downtrend line near $19.
“It then went sideways for the next couple of weeks to consolidate the move on lower volumes.
“Higher volumes are now coming back into the stock and it is getting a move on here.
“Any weakness back towards $20 would be a buying opportunity.
“A drop back under $19 would be a negative.
“If FMG does continue upwards from here, it is likely to consolidate for a short period of time between $22 and $23, with a break above $23 being the next buy signal,” Michael said.
Fortescue Metals Group (FMG)
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