PLATINUM TODAY: Consolidating today, but looking stronger overall

Short Term:
Medium Term:
Long Term:
Resistances:
R1 915 DTL (broken at)
R2 926 Oct 2016 lows
R3 991 Neckline triggered at
R4 1009 20 DMA
R5 1021 Nov 9 peak
R6 1029 Feb 9 peak
R7 1045.50 Recent high
R8 1090 May 2016 peak
R9 1195 Aug 2016 peak
R10 1289 Jan 2015 peak
Support:
S1 1009 20 DMA
S2 1009 UTL
S3 977 Neckline
S4 948 Jan 19 low
S5 911 Feb low/HSL
S6 889 Low so far
S7 811 Jan low
S8 807 Support 2004
S9 745 2008 low
Stochastics:Bullish but converging
Legend:
BB – Bollinger band
DMA – daily moving average
Fibo – Fibonacci retracement level
(H)SL – (horizontal) support line
H&S – head-and-shoulder pattern
U/DTL – up/downtrend line

Analysis

  • The rebound has triggered a potential inverse H&S; the count from this pattern is $1,108 per oz.
  • Having broken higher in recent weeks, prices pushed higher again on Friday February 24 to set a fresh high for the year at $1,045.50 per oz.
  • The recent pullback found support around the UTL and the 20 DMA; although both were breached intraday, the market avoided closing below the lines.
  • The stochastics have jumped higher having turned quite bearish last week, but they are converging again to cross lower, so it may be that prices need to consolidate again after the run up to set fresh highs. 
  • Overall we expect the uptrend to continue.

Macro factors

Investor interest in ETFs has flattened out again after a show of strength in the middle part of February – holdings have climbed to 2.37 million oz from 2.33 million oz on February 8.

The funds’ stance had turned a little more bullish in January and that ran until early February. However, in recent weeks the net long fund position (NLFP) has dipped. Both the gross long and gross short positions are in low ground so there is potential for either side to pick up. On balance, we would expect funds to get longer, but having hit resistance in February, the funds seemed in no hurry to extend exposure. That said, that may have changed with prices setting fresh highs for the year again.

 

Conclusion

Now that prices have pushed higher again, we would not be surprised to see investment interest pick up. On the chart, prices look well placed to extend gains.

All trades or trading strategies mentioned in the report are hypothetical, for illustration only and do not constitute trading recommendations.
Kathleen Retourne

About Kathleen Retourne

Kathleen has been reporting on commodity markets since 2006. She joined FastMarkets in 2011 and has immersed herself into the metal industry, specialising in LME coverage. Follow her on twitter @kathretourne