We have covered the BHP chart a few times already this year and spoken about the range that it has been trading in. Once again we have seen BHP get the bottom of its recent range, with the yield on the stock including franking pushing the 4% mark. We are also seeing the RSI become oversold again. As a result, there is a high chance that BHP should find support here and once again trade higher.
RIO has dropped back after I recently highlighted the break of a head and shoulders pattern. Like BHP, RIO has also become oversold on the RSI. This daily chart shows that it has also formed a bullish engulfing pattern here. These are all circled.
As a result, BHP and RIO have the potential to trade higher from here. One strategy that we are employing involves a bull put spread with the use of options, where we cap our gains, but importantly we cap our losses. (Obtain professional advice from your broker before using options)