BHP stock analysis: Is it time for bottom fishing?

The charts suggest BHP could extend its relief rally

A cross section of soil layers, with an oil pump jack on top                                 
BHP’s petroleum division was the star performer, rising by 3% compared to the same quarter in 2020 – Photo: Shutterstock
                                

BHP’s second-quarter result was a mixed bag, with iron ore production and shipment 2% below Macquarie Research’s forecast, while copper output was also slightly weaker than expectations, according to news.com.

In the three months ending 30 September, BHP said its iron ore production was 4% lower than the comparable quarter of the previous year. The company said the drop in production was due to planned maintenance and labour shortages.

Copper production was down 9% in the September-ending quarter compared to the same period a year ago. The company said the lower volumes were due to scheduled smelter maintenance and about a month-long delay due to border restrictions related to Covid-19.

The petroleum division was the star performer, as production rose by 3% compared to the September quarter of 2020. Ironically, BHP will be selling its petroleum business to Woodside Petroleum, as it plans to exit fossil fuels to improve its green credentials.

BHP retained its 2022 financial year forecast for producing between 1,590 kilotonnes (kt) and 1,760kt of copper. Similarly, iron ore production projections were retained between 249 megatonnes (MT) and 259MT.

RBC Capital Markets analyst Kaan Peker said: “A mixed quarter for BHP but with all cost and volume guidance unchanged, the quarter should have limited impact on the shares,” Stockhead reported.

According to Yahoo Finance, the consensus analyst share price target for BHP is $62.05. Will BHP’s stock go up and reach its target objective? What do the charts suggest? Read our BHP stock analysis to find out. 

BHP share-price technical analysis: weekly chart

BHP share-price technical analysis: weekly chart
BHP share-price technical analysis: weekly chart – Credit: Currency.com

BHP’s stock price has been on a roller-coaster ride since bottoming out at $29.77 in March 2020. From there, the stock rallied to $81.98 in May of this year, a 175% rally in just over a year.

The bulls defended the $81.98 level aggressively, resulting in the formation of a triple top pattern. This bearish setup has a target objective at $50.54. The moving averages have completed a bearish crossover and the relative strength index (RSI) is in the negative zone, indicating advantage to bears.

The current pullback could rise to the 20-week exponential moving average (EMA), which is likely to act as a stiff resistance. If the price turns down from this level, the bears will try to pull the stock toward the pattern target and then to $46.89.

This negative view will invalidate if the bulls push and sustain the price above the 50-week simple moving average (SMA). Such a move will suggest that the correction could be over.

BHP share-price technical analysis: daily chart

BHP share-price technical analysis: daily chart
BHP share-price technical analysis: daily chart – Credit: Currency.com

BHP’s stock price broke below the rectangle pattern on 18 August. The bulls pushed the price back into the rectangle on 27 August but they could not clear the hurdle at the 20-day EMA.

This suggested that sentiment had turned negative and traders were closing positions on rallies, resulting in a downtrend.

The buyers stepped in to arrest the decline near $52.50 on 20 September. Repeated attempts by the bears to break this support failed, which may have attracted buying from the aggressive bulls.

The 20-day EMA has flattened out and the RSI has risen into the positive zone, indicating that bulls are making a comeback. If bulls sustain the price above the 20-day EMA, the stock could rise to the 50-day SMA.

A breakout and close above this level could clear the path for a rally to the $66 to $68 resistance zone. Conversely, if the price turns down and breaks below $52, the next leg of the downtrend could resume.

BHP stock: Buy or sell at these levels?

BHP’s share price analysis shows that bulls are attempting a pullback which may reach the 50-day SMA. A break above this resistance could clear the path for a possible rally to $66. On the downside, a break below the 20-day EMA could pull the price back toward $52.50. 

The views and opinions expressed in this article are those of the author alone and do not constitute trading advice. Trading and investing involve substantial risks, and you should always do your own research or contact your financial advisor before arriving at a decision. Never invest more than you can afford to lose.

Trade BHP stock: BHP shares price

BHP Group Ltd
Daily change
55.2
Low: 55.2
High: 57.04

Further reading

The material provided on this website is for information purposes only and should not be regarded as investment research or investment advice. Any opinion that may be provided on this page is a subjective point of view of the author and does not constitute a recommendation by Currency Com Bel LLC or its partners. We do not make any endorsements or warranty on the accuracy or completeness of the information that is provided on this page. By relying on the information on this page, you acknowledge that you are acting knowingly and independently and that you accept all the risks involved.
iPhone Image
Trade the world’s top tokenised stocks, indices, commodities and currencies with the help of crypto or fiat
iMac Image
Trade the world’s top tokenised stocks, indices, commodities and currencies with the help of crypto or fiat
iMac Image