Technical Analysis

When you trade, you trade objectively, taking in mind the market consensus from news, fundamental analysis or technical analysis: As a trader, you shouldn't be concerned about market downturns or booms. When you trade, you trade objectively, taking in mind the market consensus from news, fundamental analysis or technical analysis and simply trading that view. You have the choice of trading each style specifically or trading a combination of each technique, taking in the news as well as the fundamental information.

The BHP weekly price chart with weekly MACD histogram. Exciting isn’t it? There are four histogram peaks above zero. Three of the previous are more or less the same height with the most recent mound a much higher one. Connecting a trendline (not drawn) from the second peak to the recent peak creates a parallel line set with the overall chart trend. Is this a sign of things to come? Will the BHP price meet brokers expectations?
(Click on the chart for the larger version if you can’t see)

Here we go with the BHP Logarithmic Price chart. Notice how the price volatility as seen in the normal price chart has demonstrated a break in the upward trending trading channel but in this logarithmic scale the stock price movements have remained within that trading channel. Interesting isn’t it? (Click on the chart for the larger version if you can’t see)

The BHP Weekly chart running for a year. Notice how at around $25 the BHP share price starts becoming volatile with larger price moves. I will also post up the equivalent log graph to show that all these movements are proportional in percentage value. In this graph simply observe the volume spikes and as well as the upward trending channel. Notice the dragonfly doji in the second most recent week along with the volume spike on that same week. Could $28 be a major support? (Click on the chart for the larger version if you can’t see)

In this analysis we are going to look at a daily BHP chart with a customized MACD Histogram (100 50 30). This chart is a daily chart for the whole year running to last Friday. (Click on the chart for the larger version if you can’t see) Notice that when the trend of the share price diverges with the MACD histogram indicates that a stock price fall is imminent.

BHP Billiton daily chart with volume. I’ve drawn two clear support lines. The most recent support line is established from the inverted hammer. However recent support may be higher around the region of [B] as a result of the higher volume at [A]. (Click on the chart for the larger version if you can’t see)

The BHP stock price has fallen considerably over the past week given the dramatic falls in commodity process this week. BHP closed the week much lower at $28.74 compared to last week's close of $31.72. Given the recent price movements BHP still remains my favourite stock to trade because of its liquidity and volatility.

I personally don’t track the S&P500 because I tend to only trade the Australian Stocks as well as forex. Keep in mind this is just an exercise of technical analysis using candlesticks. Last week the S&P closed above [A] an established resistance point as established by existing support resistance theory as well as candlestick theory.