On the back of stable commodity prices, a slightly weaker US Dollar as well as general firmer sentiment in the resources sector (which has included appreciation of it’s underlying investments), miner Anglo American plc has had a solid run over the past two months. From a low of R270, we have seen the share price advance by just under R80 to reach a multi-year high of R349.
While it is easy to extrapolate the current share price performance, the technical indicators suggest the share may have become overbought in the short term, meaning it has become extended and is possibly due a short term bearish reversal/correction.
The Stochastic, which can be seen in the bottom panel, trades above the 90 level while the Relative Strength Index recently traded at 75 and appears to be rolling over. On this basis, traders could look to take advantage of a potentially bearish short term reversal by going short.
These are the trading levels:
Short/Sell AGL above R344.30 (now R344.87)
Take Profit Target: R326.00