PLATINUM TODAY – Gets some lift after weak US data

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Short Term:
Medium Term:
Long Term:
Resistances:
R11020 June 08 peak
R21090 May peak
R31195 High so far
R41207 H&S target
R51289 Jan ’15 peak
Support:
S11106 Mid-July peak
S21103 38.2% Fibo
S31100 20 DMA
S41090 May peak
S51075.50 50% Fibo
S61047 61.8% Fibo
S71040 Low so far
S8954 Recent low
S9824.50 Previous low/HSL
S10811 Jan low
S11807 Support 2004
S12745 2008 low
Stochastics:Rebounding from low ground
Legend:

Fibo = Fibonacci retracement level
DMA = Daily moving average
BB = Bollinger band
(H)SL = (Horizontal) support line
UTL = Up trend line
H&S = Head-and-shoulder pattern

Technical Comment

Analysis

  • After two strong up waves since mid-June, prices have started to correct. They have broken the 38.2% and 50% Fibos and breached the 61.8 % Fibo.
  • We see this as consolidation within the upward trend. Prices have so far held the UTL.
  • We said two weeks ago that we would look to get long again into a rebound – this seems to be unfolding, with the stochastics crossing higher basis Friday’s close, but we would want prices to move back above $1,090 before we get bullish again.

Macro factors

Weak US data on Friday has provided some lift as the dollar weakened but we will wait to see whether or not the rebound prompts follow-through buying.

CFTC data from last Friday showed 4,972 contracts of long liquidation and 685 contracts of short selling. At 48,612 contacts, the net long position is still high even after three weeks of net selling. Given the price pullback, there may well be room for further profit-taking – the longs started to increase their holdings aggressively late in June when prices were around $980. 

ETF investors took some profits after generally adding to positions in late August.

The speed of the rebound in recent months, with a pause in the middle, suggested considerable buying energy but the higher prices seem to have attracted selling.

Fund buying and short covering (until recently) have been one aspect of the rise but wage negotiations in South Africa have also no doubt been a bullish factor. A lack of news on the latter may well have led to stale long liquidation but the price pullback might provide another buying opportunity in case there is industrial action. With producers in a tight spot and unlikely to be able to meet union demands, we would not be surprised by strikes, even if they are short-lived.

Conclusion

This correction in price seems natural and will help unwind the formerly overbought condition but we expect dips to be well supported. The market will, however, no doubt be driven by developments in wage talks.

On a long-term chart, prices are still relatively low and platinum prices are still $255 below those of gold. We would look for another buying opportunity but would not be in a particular hurry unless news breaks.

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

The post PLATINUM TODAY – Gets some lift after weak US data appeared first on The Bullion Desk.

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Source: Bullion Desk News

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