Platinum – setup for a stronger Euro

Like gold, platinum peaked above $1900 per ounce last year but has fallen a lot further since. While gold is currently at $1618, platinum is at $1413. This reflects a much greater industrial component in the demand for platinum compared to gold. In a “risk on” environment platinum may also have more upside potential.

I posted a blog earlier today, noting the possibility of further upside in the EUR: USD. Precious metals are likely to benefit from any further US Dollar weakness.

 At this stage, the horse has to some extent already bolted for EUR: USD given the large moves of the last couple of days. In these circumstances it can pay to look for other set ups that would benefit from a weaker dollar but which may still have a relatively good reward: risk profile. Platinum looks a candidate.

As the daily chart below shows, platinum is in the process of rejecting the support of a well established triangle formation

One approach to strategy would be to buy looking initially for a return to the triangle resistance. If price was to break above this resistance, buying at this level would provide an early entry for a triangle breakout strategy with potential for a significant correction of the whole move down from the peak at 1725.

A typical approach to the intitial stop would be to place it behind the current triangle support line allowing some filter to accomdate false breaks

Cheers

Ric

About Ric Spooner

Over 30 years market experience - professional trader, broker, director
This entry was posted in Forex, Gold, Trading and tagged , , , , . Bookmark the permalink.

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