BHP BILLITONON – bullish break­out

Finweek English Edition - - Creating wealth -

Trend: Up, but over­bought in short term. Long term up. Strat­egy: Traders tighten stops. Re-en­ter af­ter a pull­back. • The big­ger pic­ture shows BHP Bil­li­ton hav­ing re­cently bro­ken out of a large broad­en­ing for­ma­tion (lines 1 and 2). That’s sig­nif­i­cant. • The only short-term con­cern is that the rel­a­tive strength in­dex (on top) is giv­ing a neg­a­tive di­ver­gence from the over­bought level. That points to a short-term pull­back to oc­cur at any time. Traders tighten cur­rent trail­ing stops to a break­ing of the prior two-day low. Then look to re-en­ter (buy) on an up­ward re­ver­sal off line 1 (R158,50) or lower. In­vestors keep hold­ing re­gard­less. • The min­i­mum up­side tar­get (medium-term) is R198 – ie,

the height of the pat­tern pro­jected up. • When buy­ing af­ter a pull­back place your ini­tial stop-loss as a break­ing of the low reached be­fore re­vers­ing up from the R158 level or lower.

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