Technical Analysis Snap: Anglo digs out reduced profits

31st Jul 2009 09:25

Anglo American this morning saw underlying earnings slump by nearly 70% in the first half of 2009. As a result profits fell by almost half to $3.63bn.However, since suspending the dividend earlier this year, the share price has enjoyed impressive gains, doubling in price from its March lows of 906p. The small matter of a rival bid from Xstrata, which was rejected, has also boosted the share price in the near term. Along with the rest of the mining sector Anglo has no doubt suffered as much as its peers in the last 18 months, at one point losing 75% of its value, peak to trough, as it fell from its highs of 3,683p in May 2008, along with commodity prices. Since its lows in March, it has managed to rally but is currently running into significant resistance at 1,966.81p, which equates to a 38.2% Fibonacci retracement of its fall from its 2008 highs to its March lows of 906p. A break of this level could target a further move towards the 50% level of 2,294.50p, however a break below the trend line support, currently at 1,666.10p would undermine the upward momentum, and signal a test towards the May and June lows at 1,540p. With commodity prices still looking fairly firm and the majority of brokers fairly neutral, the share price should continue to remain fairly supported, however any weakness in commodity prices could see a drop back towards the support line from the March lows.For periodic TA updates follow me on TwitterAlso read my Investors Guide to Technical Analysis and Level 2