Key levels for Anglo American and the mining sector

The mining sector (FTSE:NMX1770)

Having discovered 92% of roadside crow deaths are caused by heavy lorries, I'm reminded that when we view one of the heavyweights in the mining sector, we should view the sector itself in the hope of spotting a signal which justifies the bloom - or gloom - of one of its components.

To view the sector, it's currently trading around 16,290 and regarded on a path toward 16,670 points.

This ambition is critical, if choosing a heavyweight for the longer term, as it appears that, should the sector manage to close a session above 16,670, we should anticipate a growth surge of an initial 2,000 points.

And this will prove to be quite a big deal for sector components. It would require trading below 14,300 before we'd experience collywobbles.

Anglo American (LSE:AAL)

Over the last couple of years, Anglo American shares have tended slavishly to mimic the sector index. Currently it's trading around 1,170p and regarded as being on a path toward 1,235p.

Visually this suggests a coming challenge of the downtrend since 2011. In the event of closure above 1,235p, we're looking for growth to a fairly useless 1,315p - useless other than breaking above a six-year downtrend.

The implications of such an upward break move the price into big picture territory, permitting us to mention 1,700p in the future. The seriously long-term attraction will be regarded as being 2,186p.

If the market intends to derail any optimism, the share requires to close below the red line - currently 1,001p - as 470p becomes attractive, though will require a few other criteria fulfilled as the initial drop ambition calculates at 820p.

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, Shareprice, or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

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