BHP Billiton (BHP) made a slight new high for the move up last month, but less than enthusiastic indicators and price action suggest a sideways to slightly lower correction for BHP in the weeks ahead.
In this one-year daily chart of BHP, above, we can see that prices have bounced off the rising 50-day moving average during July and early September. BHP is above the 200-day moving average but its slope is flat. The daily On-Balance-Volume (OBV) line moved up with prices in March and April but has trended sideways the past four months telling us that neither buyers nor sellers have been aggressive.
Prices made higher highs in July and August but the momentum indicator in the lower panel shows lower highs. This is a bearish divergence and indicates that the strength of the uptrend has been waning.
This three-year weekly chart of BHP, above, has mixed technical signals. Prices are above the slightly rising 40-week moving average line. Volume has declined the past two months but the weekly OBV line is still pointed up. The weekly Moving Average Convergence Divergence (MACD) oscillator is above the zero line, which is a plus but the two lines of the indicator have begun to narrow toward a possible liquidate longs sell signal.
Bottom line - all things considered, BHP looks poised for a pullback to $28 or even into the $28-$26 area in the weeks ahead.
