Updated BHP Chart, as at 25/2/2010

BHP is the largest company in the Australian stock market and the largest diversified miner in the world. It is difficult to imagine a bullish Australian market without a bullish BHP. As such, BHP is the bellwether stock in our market.

Since the bull market began in March09, BHP has been in a remarkably consistent uptrend channel. The dotted uptrend line is almost exactly replicated by the 150-Day SMA (not shown on the chart). Whenever BHP has dropped down to that SMA it has bounced up again towards the top of the channel.

But ... not this time.

This time it appears to be forming a bearish flag. If it drops below the trend line and the 150-Day SMA, then it would seem that the long term uptrend is over. Next major level of support looks to be around the 36.00 level.

The On-Balance Volume Chart has already broken below its 150-Day SMA, so that adds to the probability of a break lower.

Extrapolating to the broader market, if BHP breaks below the uptrend line - then the key 4500 level on the XAO is also likely to be broken. Next major areas of support look to be 4300, then 4100.

Of course, BHP might continue upwards. We shall see.

Cheers

Red