BHP Billiton plc, Anglo American plc: Share price could yet head lower

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Category: Commodities

Published on Monday, 15 August 2011 10:11

Written by Sam Coventry

The RSI is below its neutrality area at 50. The MACD is below its signal line and negative.

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BHP Billiton plc (LON:BLT) shares are still at risk of further falls. This is according to a technical analysis of the share price.

Technical analysts at Trading Central have warned that the downside in BHP Billiton shares is likely to prevail as long as 2157 acts as resistance.

"The RSI is below its neutrality area at 50. The MACD is below its signal line and negative. The configuration is negative. Moreover, the share stands below its 20 and 50 day MA (standing respectively at 2163.8 and 2280.18)," say Trading Central.

BHP Billiton shares are currently 2.03% higher at 2059.

Elsewhere in the FTSE 100 mining sector we see that Anglo American plc (LON:AAL) shares are also facing similar downside pressures.

Trading Central say:

"Our preference: the downside prevails as long as 2594 is resistance.

"The RSI is trading below 30. This could mean that either the stock is in a lasting downtrend or just oversold and that therefore a rebound could shape (look for bullish divergence in this case). The MACD is below its signal line and negative. The configuration is negative. Moreover, the stock is trading under both its 20 and 50 day MA (standing respectively at 2746 and 2879.76)."

Looking at the markets, the FTSE 100 has been helped higher by Asian indices which took some encouragement from Japan’s Q2 GDP data.

The data came in at -0.3% QoQ, this was markedly less severe than feared (consensus was -2.7% QoQ).

A note from Altium Securities released this morning does warn that while the markets are more stable this morning it would be premature to call the end of the recent sell off:

"Some calm appears to have returned to markets after some moderately supportive US data towards the end of last week and a weekend thankfully lacking further major dramas.

"It would be premature to suggest that the equity selloff is over given that sizeable macro challenges remain, but valuations are now pricing in potentially significant downgrades to earnings forecasts and investors may be tempted to start looking for areas where that has been overdone."