Rio Tinto (RIO) Shares Plunge 4.31% as Bearish Engulfing Pattern and Death Cross Signal Continued Downtrend Toward $85.00

Rio Tinto (RIO) closed the most recent session at $91.03, down 4.31%, marking a significant pullback from its prior high of $95.13. This sharp decline suggests potential bearish momentum, warranting a detailed technical assessment to evaluate short-term and long-term implications.

Candlestick Theory

The recent price action exhibits a bearish engulfing pattern, with the session’s close near the low of $89.63, forming a long lower shadow and a wide-bodied candle. This pattern often signals a reversal from bullish to bearish sentiment. Key support levels can be identified at $91.03 (current close) and $87.30 (a prior low on January 22, 2026), while resistance remains at $95.13. A breakdown below $87.30 could target $85.68, a former support-turned-resistance level. The absence of a bullish hammer or morning star pattern suggests limited immediate reversal potential.

Moving Average Theory

The 50-day moving average (calculated at approximately $85.50) has crossed below the 200-day MA ($84.00), forming a bearish "death cross." The 100-day MA ($86.00) is also trending downward, reinforcing the bearish bias. Short-term traders may monitor the 50-day MA as a dynamic resistance; if the price fails to hold above this level, further declines toward $83.00 (200-day MA) could follow. The confluence of multiple moving averages sloping downward suggests a high probability of continued bearish momentum.

MACD & KDJ Indicators

The MACD line (-$1.20) has crossed below the signal line (-$0.80), with the histogram shrinking, indicating waning bearish momentum. However, the KDJ indicator shows a bearish crossover, with %K at 15 and %D at 25, suggesting oversold conditions but not yet signaling a reversal. A divergence between MACD and KDJ—where MACD shows bearish momentum while KDJ indicates oversold levels—may hint at a potential bounce, though this remains probabilistic.

Bollinger Bands

Volatility has expanded recently, with the price near the lower band of $89.63–$93.33. This proximity to the lower band, combined with a contraction in band width during the prior week, suggests a potential short-term rebound. However, sustained trading below the 20-day MA ($90.00) could force the price toward the lower band’s support level of $88.00.

Volume-Price Relationship

Trading volume surged on the recent 4.31% drop, with 7.4 million shares traded, validating the bearish move. However, volume has since declined, implying weakening conviction in the downtrend. A follow-through increase in volume on a break below $87.30 would strengthen the case for further declines, while a lack of volume could signal a temporary pause.

Relative Strength Index (RSI)

The 14-day RSI stands at 28, entering oversold territory. While this may suggest a short-term bounce, RSI has not yet formed a bullish divergence (higher lows in price vs. RSI), reducing the likelihood of a reversal. Traders should remain cautious, as oversold conditions in a strong downtrend often precede further declines rather than reversals.

Fibonacci Retracement

Applying Fibonacci levels to the recent $97.11 high and $80.03 low (December 31, 2025), the price is approaching the 61.8% retracement level of $89.00. A breakdown below this level would target the 78.6% level at $85.00, aligning with the 200-day MA. The current price near $91.03 suggests a potential test of the 50% retracement level ($88.57), where a bounce or continuation of the downtrend could occur.

The analysis highlights confluence between bearish moving average crossovers, oversold RSI, and Fibonacci support levels, all pointing to continued downside risk. Divergences between MACD and KDJ indicators introduce uncertainty, but the strong volume on the recent drop and alignment of multiple technical signals suggest a high probability of further declines toward $85.00. Traders should monitor the 50-day MA and Fibonacci levels for potential short-term bounces, though the overall bias remains bearish.