BHP BILLITONON – bullish breakout
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.