BHP Share Price is Down 10% from its YTD High – What Next?
BHP share price is retreating today as part of the overall sell-off in mining companies in the FTSE 100. The shares are down by more than 1.5%, becoming the third-worst performer in the index after Polymetal and Fresnillo that are down by more than 1.60%. Other top laggards in the index are Anglo American, BP, Glencore, and Rio Tinto.
The background: BHP is one of the biggest mining company in the world with operations in Africa, Australia, and the Americas. The firm mines metals like copper, iron ore, nickel, petroleum, potash, and metallurgical coal.
As a result, the company does well when the prices of these commodities do well. Indeed, this year’s rally of metal prices has pushed BHP share price to the highest level since June 2019. They have risen by more than 100% from the year-to-date low of 933p.
What happened: BHP share price is falling today mostly because of the sharp decrease of commodity prices. Copper is down by more than 1.15% while nickel is down by more than 2%. Similarly, lead, platinum and zinc have declined by more than 1%. This is mostly because of the overall worries that of demand as a new strain of coronavirus continues to drop.
Also, there is chatter in the market about whether commodity prices will continue to rebound in the coming year.
BHP share price outlook
So, what next for BHP: The daily chart shows that BHP shares are hovering near the highest level since 2019. They are still above the short and longer-term moving averages and the important support at 1,853p. The RSI is hovering around the overbought level. Therefore, in the near term, there is a possibility that BHP stock will pull-back and possibly test the support at 1,853p.