BHP BHP Billiton Analysis April 2016 (W,M,Q)
Created on Tuesday, 05 April 2016 03:31
Written by Austin Galt
BHP Billiton Ltd (BHP) is a diversified natural resources company listed on the Australian Stock Exchange (ASX) with a market capitalisation of around $80 billion. Price last traded at $15.98.
Let’s analyse the technicals using the quarterly, monthly and weekly charts.
BHP QUARTERLY CHART
We can see price has been absolutely whacked over the past year however I believe the downtrend is nearing its end.
I have added Fibonacci retracement levels of the move up from 1998 low to all time high in 2008. The recent low was a smidgeon above the 76.4% level which stands at $14.02 and I expect price to hit this level and probably nudge a touch under it.
I have drawn a Fibonacci Fan from the 1998 low to 2008 high and price looks headed for the 88.6% angle which is where I favour the low to form around.
The Bollinger Bands show price still drawn to the lower band with no sign yet of a clear move away.
The RSI is oversold so perhaps we could expect a low shortly. This is a new low so it is unlikely to be the final low in the long term scheme of things.
The MACD is bearish although the averages appear to have diverged quite a bit and a rally would help alleviate this condition.
BHP MONTHLY CHART
The PSAR indicator is bearish with the dots above price and this rally pulled up just short of the dots so no damage done to the downtrend.
The Bollinger Bands show price moving slightly away from the lower band but without much authority and I favour one final move back to the lower band to set up a low.
The Fibonacci fan shows the recent price high at resistance from the 61.8% angle and price now looks to be moving lower again.
The horizontal line denotes the November 2008 low which looks to have provided resistance at the recent price high. I believe price is currently tracing the final stages of a major low and this will set up a false break low once price rallies back above this level.
The RSI is still weak while a new price low will likely set up a bullish divergence.
The MACD indicator is still marginally bearish so further downside still has to be favoured.
BHP WEEKLY CHART
The Bollinger Bands show price was rejected at the upper band and should now get back down to the lower band.
The Fibonacci fan shows the recent high was at resistance from the 38.2% angle and I favour one final price low that is around support from the 23.6% angle. Let’s see.
The moving averages with time periods of 100 (red) and 200 (black) are in bearish formation so consideration needs to be given to any subsequent move higher being a bear rally only.
The RSI looks like it may form a triple bullish divergence on the next low. These setups often lead to significant rallies which is my expectation here.
The MACD indicator is bullish although a bearish crossover looks imminent.
Summing up, I believe one final low awaits before a substantial bear rally takes place.
Disclosure – I have no financial interest in BHP.