Platinum Could Hit The Floor

The Global Outlook: Platinum Is In Serious Trouble

Chart courtesy of TradingView.com

Indeed, this metal is very tricky. One moment it can be flying high, then it can take a swing hitting the bottom and again and again. This time around, Platinum is on its way down, falling like a hot knife through butter. Without any problems, it has lost $500, down from $1500.

The minor swing was detected at the $1200-$1300 level on the monthly charts and then the metal slid even faster. The price has easily broken below both the 2006 low at $1059.60 and the 1980 high at $1045. The psychologically important round number level at $1000 has fallen even quicker.

Platinum has entered a very volatile area of long-term support between the $625 and $1045 marks. The lower band had been acting as strong resistance for the bulls for more than 20 years from 1982 and had been cracked only with the seventh (often this number of attempts is required to break the strong level) attempt.

I want to stress the importance of the two blue dashed segments labeled by AB and CD on the chart. AB is the primary segment that measures the downfall of $1547 from the $2308.80 high in March of 2008 to the bottom at $761.80 in October of the same year. The CD segment is the clone of the AB segment from the 2011 high at $1918.50 with downside target at $371.5. It's interesting that this figure is close to the decade bottom that had formed in 1991-2001 around the $330 level.

The downside target is quite ambitious, but with Platinum's abrupt high amplitude moves, it all looks possible. And as one top trader said in Market Wizards, "A good trader should be able to imagine any level of a commodity if it has been projected from his plan."

The Short-Term Outlook: Sellers Control The Ball

Chart courtesy of TradingView.com

The weekly chart of Platinum looks like the graph of a year's temperature and we are entering the winter season. The temperature is falling back to the level at the start of the year. And so does the Platinum price, the rise from 2008 is now fading after touching the climax level at $1918.50.

In the middle of the cycle, large players had been accumulating their shorts controlling the price within a $500 range between $1900 and $1400 (highlighted in the blue oval), then they pushed the market down heavily for almost $500 to the current sub-$1000 area.

The target for this move is $761, the start of the cycle. But if you keep in mind the global outlook, it could just be the first big stop of the price's downward move.

Resistances are now located every $100 at $1100, $1200, and $1300 and the hard one is above the $1400 level.

Below the $90 level, traders will realize that the Bears are serious and can add to the shorts.

Intelligent trades!

Aibek Burabayev
INO.com Contributor, Metals

Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.