PLATINUM TODAY – Prices appear to have finally found some support

Short Term: Medium Term: Long Term: Resistances: R1 991 DTL R2 991 20 DMA R3 1020 June 08 peak R4 1090 May peak R5 1195 High so far R6 1207 H&S target R7 1289 Jan ’15 peak Support: S1 1090 May peak S2 991 20 DMA S3 1003 50% Fibo (2016 rally) S4 957 61.8% Fibo (2016 rally) S5 954 June low S6 937 Previous low/HSL S7 926 Low so far S8 911 HSL S9 811 Jan low S10 807 Support 2004 S11 745 2008 low Stochastics:Turns higher in 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 The pullback in platinum prices has been relentless, with prices now back below the 61.8% Fibo of this year’s rally. Spot prices set a low at $926 per oz – the next support level is at $911. The market looks extremely weak, albeit oversold, but some dip-buying is emerging. The stochastics are trying to turn higher in low ground – we wait to see if prices get some follow-through lift. Macro factors Given the weakness in prices and limited support into the drop, it looks as though the industry is no longer worried about the potential for strikes in South Africa. Members of the National Union of Mineworkers (NUM) at Implats’ refinery have agreed a two-year wage deal while Amplats is set to recommend a deal to its workers, which will go to a vote on Saturday, October 22. The funds’ gross long position had become very extended, peaking at 65,259 contracts on August 9. The previous peaks were around 55,000-59,000 contracts. The position was 48,923 contracts on October 11. The gross short position had fallen to a low of 9,310 contracts on August 9; it has since climbed to 22,645 contracts, having climbed 4,736 contracts last week. With prices off $261 per oz from the high and back at levels seen in February, perhaps the market has now fully discounted the likelihood of no strikes – if so, the market may be at risk of short-covering.   Conclusion Prices have corrected more than we thought they would, especially with robust European car registrations and a market in deficit. But the price correction makes sense if strikes are unlikely, which now seems to be the case. Given how far prices have fallen, we would have thought that physical demand and investment demand would be hunting bargains – platinum’s discount to gold prices is now $325 per oz. Given this discount and the oversold appearance, we would now look for prices to work higher. All trades or trading strategies mentioned in the report are hypothetical, for illustration only and do not constitute trading recommendations.

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