Technical Analysis – Platinum – Downside breakout

Aug 18, 2014 - 11:51 AM GMT
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Short Term:
Medium Term:
Long Term:
Resistances:
R1 1,447 Lower BB
R2 1,453 UTL
R3 1,459 100 DMA
R4 1,463 61.8% Fibo
Support:
S1 1,445 August low
S2 1,435 50% Fibo
S3 1,433 200 DMA
S4 1,430 May 2013 low
Stochastics:
Legend:

  • Fibo – Fibonacci retracement level
  • H&S – Head-and-shoulder formation
  • MACD – Moving average convergence/divergence
  • DMA – Daily moving average
  • BBs – Bollinger band

Analysis

  • Platinum is continuing lower today – it broke below the lower BB at $1,448 before finding support from the August low at $1,445.
  • The stochastics, MACD and momentum are all heading lower so downside strength appears to be accelerating.
  • The break below the lower BB indicates renewed downtrend strength.

Conclusion

  • Platinum has broken below its UTL. A maintained close below this level would indicate a break from its uptrend, turning us neutral-negative. 
  • The metal looks to have found support from the August low at $1,445. If support from this level is not breached, indicating renewed support below the UTL, we would look for a pullback to challenge resistance from the UTL.
  • A close below this level, however, would signal maintained selling pressure. We would then look for a push lower to target support from the 200 DMA at $1,433, which would confirm sustained selling strength. 
All trades or trading strategies mentioned in the report are hypothetical, for illustration only and do not constitute trading recommendations.