$BHP BHP Billiton, too much too soon? $JSE
BHP Group in South Africa broke down towards the end of Feb from a rising bullish channel that was in place since early 2016. After breaking down from this channel, the stock dropped a further R100 very rapidly in the space of 2 weeks before bottoming out on high volume. The stock has spent the better part of 4 weeks regaining this massive drop, but i believe this has now presented us with an opportunity to short BHP Billiton in anticipation for a consolidation & correction in price. I find this area between R300 - R306 particularly important for a number of reasons:
(1) we have now retested the underside of the bullish channel that was in play for the last 4 years. Normally when one see's such a big technical break, the channel which acted as support can often turn into resistance. This retest and failure can often also be seen as the "kiss of death" with a bigger drop in price to come in weeks ahead.
(2) this is also the 61.8% fib retracement using the most recent lows and highs over the last year (R195 & R369)
(3) this is also where we find the 50 week moving average (blue moving average) which has been a reliable indicator of support over the last 4 years, it could now become a reliable level for resistance.
(4) the RSI level has reached the midpoint of its range at 50. this level will often coincide with tops when a trend turns negative in a stock
(5) the last 4 weeks has seen price move higher, but each successive move higher has been accompanied by smaller price ranges and less volume (this is not a bullish price action).
(6) the level at R306 was also a level of support back in October 2019, which will now likely turn into resistance on the re-test.
Putting this all together leads me to believe that this area could well be worth an opportunity to take a short, with an initial target to retest the 200 week moving average (green line) at approximately (R270 - R275).
(1) we have now retested the underside of the bullish channel that was in play for the last 4 years. Normally when one see's such a big technical break, the channel which acted as support can often turn into resistance. This retest and failure can often also be seen as the "kiss of death" with a bigger drop in price to come in weeks ahead.
(2) this is also the 61.8% fib retracement using the most recent lows and highs over the last year (R195 & R369)
(3) this is also where we find the 50 week moving average (blue moving average) which has been a reliable indicator of support over the last 4 years, it could now become a reliable level for resistance.
(4) the RSI level has reached the midpoint of its range at 50. this level will often coincide with tops when a trend turns negative in a stock
(5) the last 4 weeks has seen price move higher, but each successive move higher has been accompanied by smaller price ranges and less volume (this is not a bullish price action).
(6) the level at R306 was also a level of support back in October 2019, which will now likely turn into resistance on the re-test.
Putting this all together leads me to believe that this area could well be worth an opportunity to take a short, with an initial target to retest the 200 week moving average (green line) at approximately (R270 - R275).
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