LPPM WEEK – Platinum weekly – Start of the reversal?

Otmane El Rhazi from The Bullion Desk.

Short Term: Medium Term: Long Term: Resistances: R1 1,176 December low R2 1,179 21 WMA R3 1,189 23.6% Fibo Support: S1 1,152 7 WMA S2 1,118 April tweezer bottom S3 1,088 Lower BB S4 1,088 March low Stochastics: Legend: Fibo – Fibonacci retracement  MACD – Moving average convergence/divergence WMA – Weekly moving average BBs – Bollinger bands UTL – Uptrend line Technical Comment Analysis Platinum’s return above its 7 WMA at $1,152 suggests a shift in short-term pressure to the upside. The metal is now challenging resistance from the December low at $1,176. The stochastics are drifting lower so buying above the 7 WMA seems to have eased. But the MACD and momentum are both drifting higher, confirming reduced downside strength.  The metal’s divergence from the lower BB at $1,088 suggests an easing in downtrend strength. Conclusion Platinum continues to trade sideways in its recent consolidation range but it has returned above the 7 WMA, turning us neutral-positive.  The metal is now trading between the 7 and 21 WMAs; which way it breaks out from this range will signal the predominant short-term price trend.  Failure to break resistance from the 21 WMA would return the price to its recent range, opening up a retest of support from the April tweezer bottom at $1,118. Key events: Since this is LPPM Week in London, the PGM markets are likely to come under greater scrutiny. This may result in increased indecision while investors await confirmation of the new consensus.  The dollar index looks to have found support from the bottom of its previous trading range at 93.25; it is now pulling back higher. A continued reversal would return downside pressure to prices, capping gains again. Beijing has made another interest-rate cut, its third in six months, to spur lending and help bolster growth in the faltering Chinese economy. But weak new loans and money supply data indicates that these measures are yet to take effect, making further monetary stimulus likely. With Chinese equities seemingly having got ahead of their fundamentals and Beijing having already taken steps to dampen gains, any rotation out of equities could trigger a reversal in falling physical purchases. A recovery in Europe’s predominantly diesel-engined auto market should drive increased consumption. European new passenger car registrations rose 6.9 percent to 1,091,343 units in April from April 2014 and were up 8.2 percent at 4,338,435 units in the first four months of the year, according to data from the European Automobile Manufacturers Association (ACEA). All trades or trading strategies mentioned in the report are hypothetical, for illustration only and do not constitute trading recommendations.

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