AngloGold Ashanti Limited (NYSE: AU)

AngloGold Ashanti Limited engages in the exploration, production, and marketing of gold. It also produces by-products, such as silver, uranium, and sulfuric acid. The company’s principal projects include the Gramalote and the La Colosa projects located in Colombia; the Kibali and the Mongbwalu projects located in the Democratic Republic of the Congo; and the Tropicana project located in Australia. It also operates in South Africa; Continental Africa, including Ghana, Guinea, Mali, Namibia, and Tanzania; and the Americas comprising Argentina, Brazil, and the United States. AngloGold Ashanti Limited was founded in 1944 and is headquartered in Johannesburg, South Africa.

Please take a look at the 9-month chart of AU (AngloGold Ashanti Limited) below with my added notations:

9-month chart of AU (AngloGold Ashanti Limited)

Ashanti’s stock had been trading in a sideways range since June and now seems to have formed a base. Several times over the last (5) months, the stock had also formed a key resistance level at $15 (red). Earlier this week the stock finally broke up out of its base and above that important $15 level. So, assuming AU holds $15, the stock should be moving overall higher from here.

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The Tale of the Tape: AU had a key level of resistance at $15 that should now act as support on any pullbacks. A long trade could be entered on a pullback to $15 with a stop placed below that level. A break back below $15 could negate the forecast for a move higher.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT

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