BHP At Crossroads

BHP currently sits around 36.50, at a point where it broke down twice last year in late February and early May, before breaking through the resistance in December. Earlier this month, the 61.8% retracement level of the all-time high made in May 2008 was tested, but the rally has since fallen flat.

On the weekly chart, BHP remains range bound. We may see a bounce off the resistance-now-turned-support at current levels at 36.50, but its price may remain sandwiched between the 100WMA and the 10WMA in the short-term. The overhanging upper channel trendline from May 2011 may also present resistance, however upon clearing this level, bulls may look to push a retest of the 61.8% retracement level at 38.54. If the 36.50 level falls through, then support at 10WMA and the 50% retracement at 35.00 will be put into play.

The daily chart reiterates room to move up to around the mid-37 range, indicated by short-term upper channel trendline, however prices may run into quick resistance at the 20DMA. Signs may be bullish later this week if 36.50s can be cleared decisively, and the MACD continues to turn around.

Bulls must look towards once again clearing the 38.2% retracement level of the April 2011 highs at 37.62. Another failed attempt may suggest the bears have the near-term edge.