At the time of writing, shares of BHP Billiton Ltd [ASX:BHP] are up by 3.68%, to $30.89 per share.
Why did BHP Billiton Ltd shares do this?
BHP Billiton is considered a blue chip company and tends to move with the market. That makes sense. The ASX 200 Index has nosedived today by 133.1 points to 5,695.9 points:
For the past few weeks, the ASX 200 has been in freefall. It’s now moving towards support at the 5,600 zone, which dates back to the July 2016 high. Will it bounce from there? Who knows. But if the market moves higher, it should spell good news for BHP Billiton. BHP Billiton has collapsed with the overall market:
The share price has moved towards major support at $31 per share. It’s trading below that price now. If the market heads lower tomorrow, we could see BHP Billiton fall towards the $29–28 zone. I believe that could be a good buying opportunity, with a stop-loss lower at $27 per share.
What now for BHP Billiton Ltd?
There’s a good chance the share price will tap resistance before making its next move. We really need to see the overall market boom for the share price turn around, however. 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, though this wasn’t enough to prevent BHP Billiton’s share price falling lower with the overall market. That said, iron ore is re-testing resistance at the moment ― it might pull back slightly in the weeks ahead. In that case, given iron ore is a large source of BHP Billiton’s revenue, the share price might fall a bit further. But the trend is headed higher, so it’s too early to tell.
The bottom line: BHP Billiton’s future is mainly dependent on the overall market today, rather than the iron ore price. But we’re reaching a point where the company looks like a good buying opportunity. Get ready ― the wheels might start to reverse soon. We will track this story and analyse any future developments here at Markets & Money.
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