Actionable Swing Trade Ideas in Steel

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Tickers discussed: BHP CLF MT RIO

Trades about to Happen presents objective, low-risk, actionable swing trade ideas with the key levels identified for traders to alarm.

The Steel Sector

Steel, like the rest of the materials and commodity complex, is benefitting from a strong spike in demand. The stock price action and the charts speak for themselves. What I did was to sift through my chart deck to find reasonable trades where there were objective levels to shoot against. There are other stock that have run harder but they are extended and too far away from objective levels to take a shot.

Trading a Basket

Although I have not covered off the charts here, another approach is to buy the $SLX ETF which holds a basket of steel names. Another ETF worth noting is $XES. It is 50% steel, 15% aluminum, 5% Copper and a bunch of smaller components.  Trading these eliminated the single stock risk and you can hold them through the earnings cycle.

Trades about to happen in the Steel Sector

BHP Daily

BHP Billiton is grinding higher in the ascending triangle. Overhead resistance lies at $78.50. A breakout should open running room for approximately $10 measured move advance.

CLF Daily

Cleveland Cliffs is grinding higher within the rising wedge. A breakout above $21 gives it room for a nice advance. On the breakout, if you get long, set a stop just below $21

MT Monthly 

Different look here…note the monthly chart. Price is on the verge of breaking out above key overhead resistance at 31ish. With a break above there will be some nice running room up to $50 as T1. Although you’d be welcome to trade shorter time frames, one way to approach this is to buy Jan 2022 calls on the breakout and not worry about the day to day wiggles.  I think the steel sector has strong tailwinds and should do well for the balance of the year. As always, set a stop and respect it should the thesis not play out.

RIO Daily

Price is breaking above a well defined level at $88.  I like it long against $88 with a stop just below. Today there were buyers of 1700 RIO Jul 96.57 Calls.  I am in this trade.


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