Next one is BHP, again for no particular reason.......
The first thing to stand out on the BHP monthly chart, is that three of the last four months have had above average volume.
And not just high volumes, but volumes that have been higher than many previous months.....back until the May 2012 monthly bar.
So knowing that, the price action that corresponds with those higher volume bars could possibly be important, so I numbered the recent bars to look more carefully at what has been going on.
OK, so bar #1 is a breakdown bar, where price has broken down and closed below a horizontal line drawn across where price has previously found support - marked 'P' (interestingly the May 2012 bar was also a breakdown bar - marked).
A breakdown like this is usually 'full of selling', but is sometimes a fakey and actually contains hidden or concealed buying.
When this is the case, the tell tail response will be seen in the next bar.
So bar #2 had lower volume, and below average volume overall, where spread narrowed and the close was poor.
During this month, price made an attempt at recovering the line, which eventually failed and BHP again closed below the breakdown line.
This also helps to confirm the breakdown on the previous bar was not a false breakdown.
Then in response bar #3 was a widespread down bar on above average volume, confirming the breakdown on bar #1.
The close was at the month lows, and in hindsight we can see that there was no positive response on bar #4 (so no suggestion of hidden or concealed buying), so we can also consider bar #3 'full of selling'.
Now Bar #4 is interesting.
The spread has narrowed considerably (compared to the previous bar - or any of the previous four bars (months) for that matter), and the after initially pushing lower during the month, the close was back into the top half of the bar, and closed little changed from the previous close.
Finally the volume was again above average, and all this happened at a level where price has previously met both support and resistance.
All this would suggest that some (possibly just speculative ??) buying took place in BHP this month (December).
An up month in January would help to offer some confirmation of this buying.
However, a 'V' shaped recovery overall would be a very low probability here.....there is no obvious washout, and any buying may only be speculative for trading purposes, or perhaps preliminary support at best.
This needs to play out further.......much further.......before any serious upside recovery can be considered (although for trading purposes 21.61 then 24.76 are the two upside levels that initially appear on the chart).
Finally, an immediate failure at this level would probably see any positions taken in December dumped, causing another widespread downbar in response.
(20min delay)
