Tata Steel Foretells a Bearish Future

Around June 11, 2010, it was noticed that Tata Steel was indicating that the future for metals was going to be very weak. A head and shoulders pattern on a descending neckline provided all the clues that something negative was in place for iron ore companies. At the time, it was the 40 percent mining tax that Australia slapped on mining companies owning mines in Australia, a move that was softened later by the new Australian Prime Minister.

Today when we see Tata Steel, it is clear that the right shoulder has been formed, unless the high around 550 is taken out again. Yet nothing is safe for Tata Steel unless 675 is knocked out which would make the right shoulder higher than the left and thus negate the H&S pattern.