BHP Billiton Plc : The bearish trend might get the upper hand
By Sandra Pinturault
Entry price | Target | Stop-loss | Potential |
---|---|---|---|
GBX 1,912.5 | GBX 0 | GBX 2,015 | +100% |
Compared to its fundamentals and its peers, the company seems overvalued. It has a 2.89x EV/Sales ratio for 2013. Moreover, analysts polled by the Thomson Reuters consensus regularly revised downward their earnings per share and revenue estimates.
From a technical viewpoint, the security is in a bearish trend in the long and mid-term, even if prices have increased in the short term. The current technical rebound allows the stock to be close to its GBp 1944 resistance. Despite the breakout of 20-day moving average, prices should decrease soon under the GBp 1944 resistance.
Therefore, fragile fundamentals and technical pattern let see a downside potential. Investors can take a short position close to the GBp 1944 resistance area and aim a first return in the GBp 1762 support area. A stop loss will be fixed above GBp 1944 because a breakout of this threshold would invalidate this trading strategy.