PLATINUM TODAY: Finds support, rebounds; but seems in no hurry

Short Term:
Medium Term:
Long Term:
Resistances:
R1 915 DTL (broken at)
R2 926 Oct 2016 lows
R3 976 20 DMA
R4 1,029 Feb 9 peak
R5 1,045.50 Recent high
R6 1,090 May 2016 peak
R7 1,195 Aug 2016 peak
R8 1,289 Jan 2015 peak
Support:
S1 1,012 UTL (broken at)
S2 976 20 DMA
S3 948 Jan 19 low
S4 948 61.8% Fibo (Dec-Feb rally)
S5 932 Mar 15 low
S6 911 Feb low/HSL
S7 889 Dec low
S8 811 Jan low
S9 807 Support 2004
S10 745 2008 low
Stochastics:Bullish
Legend:
BB – Bollinger band
DMA – daily moving average
Fibo – Fibonacci retracement level
(H)SL – (horizontal) support line
H&S – head-and-shoulder(s) pattern
U/DTL – up/downtrend line

Analysis

  • Platinum prices are rebounding after a significant sell-off that severely dented this year’s rally. The correction took prices below the 61.8% Fibonacci retracement level of this year’s rally and got close to the December base and long-term UTL. 
  • Another rebound is under way, but so far prices have not got back above the 20 DMA.
  • The stochastics are bullish, however, so the rebound may have further to run. The medium-term chart, (see inset) is looking mildly bullish, but prices seem in no hurry to close the gap with gold prices. 

Macro factors

Investor interest in ETFs had flattened out again after shows of strength in the middle and late parts of February and again in mid-March; recent days have seen redemptions. Holdings stand at 2.38 million oz, up from 2.33 million oz on February 8 but below this year’s peak of 2.39 million oz on March 16.

The funds’ trading Nymex turned more bearish in recent weeks with the net long fund position dropping to 30,175 contracts from 44,610 contracts at the end of February. Last week saw the net position drop 8,452 contracts, with 3,496 contracts of long liquidation and 4,957 contracts of short-selling – a double negative whammy. Since the most recent data point, March 14, prices have rallied to $969 per oz from $938, so it will be interesting to see if that has been prompted by short-covering or fresh buying. Both the gross short and gross long positions are in or near low ground, see report & chart.

 

Conclusion

After the recent sharp pullback, platinum prices may be able to edge higher – the fundamentals are supportive, prices are relatively low and the overall economic climate is mildly bullish, although we do have concerns that the Europen auto market may struggle to see as strong a growth as it has seen over the past 18 months or so. On balance, though we are bullish for gold prices and that should support platinum prices too, especially as they remain at a discount to gold prices.

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