At the time of writing, shares of BHP Billiton Ltd [ASX:BHP] are up by 2.64%, to $33.06 per share.
Why did BHP Billiton shares do this?
For the past few weeks, the ASX 200 has been in freefall towards support at the 5,600 zone. That level dates back to the July 2016 high. It’s putting in a nice bounce as we speak. That said, momentum is slowing down around the 5,800 level. In that case, there’s a risk we could see another drop towards major support at the 5,600 level. If the market moves lower, BHP Billiton’s share price is likely to fall. BHP Billiton has collapsed with the overall market:
The share price moved towards major support at $31 per share, where it bounced with the market. Resistance stands at the $33 per share level, where the company is trading today. If the market heads lower tomorrow, however, BHP Billiton’s share price could fall towards the $31 zone and see a technical double bottom.
What now for BHP Billiton?
There’s a good chance the share price will pull back before making its next move. We really need to see the overall market boom for the share price turnaround. That said, let’s take a look at the iron ore price ― a large contributor to BHP Billiton’s earnings:
The iron ore price has marched higher over the past two months, despite BHP Billiton’s share price falling lower with the overall market. That said, while it might pull back slightly in the weeks ahead, iron ore is booming at the moment. In that case, given iron ore is a large source of BHP Billiton’s revenue, the share price should be supported.
The bottom line: BHP Billiton’s future is mainly dependent on the overall market today, rather than the iron ore price. We warned that BHP would bounce around the $31 zone last week. This week, we’re warning that BHP isn’t out of the woods yet. Get ready ― the wheels might start reversing soon and BHP could pull back. We will track this story once a week and analyse any future developments.
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