Trading platinum group metals
Platinum, palladium and rhodium had a very strong start to the year.
Platinum, palladium and rhodium had a very strong start to the year. However, a short-term correction is underway, and traders will be assessing whether this is a pullback or early signs of a larger trend reversal
After adding 8% in 2020, the price of platinum has given back most of its gains for the year.
While in the short term we are seeing a pullback in price, the medium to longer term trends remain up for the commodity. This is noted as the price currently trades below the 20-day simple moving average (20MA) whilst still firmly above the 50 and 200-day simple moving averages (50MA & 200MA).
The pullback has moved the platinum price into oversold territory. Traders respecting the longer-term trends, might look for a move out of oversold territory and price close above the dotted trend line as confirmations that the short-term decline is over and reversing course. In this situation the near-term high at 1030 becomes the initial upside target, while a close below the 955 level instead would suggest the failure of the move.
The spot palladium price continues to trade 17% higher this year despite the short-term pullback currently underway. The trend bias remains up when looking at the price relative to the 20MA (red), 50MA (green) and 200MA (blue). The stochastic is suggesting that the pullback may not yet be complete as it trades in neutral territory. Traders looking to join the longer-term uptrend might hope for the pullback to extend into oversold territory with the price back towards the 2150 level. It should, however, be noted that even a deeper pullback towards the 2000 level would still consider the long-term trend to be up.
Rhodium (DB Physical ETC)
Gains in Rhodium this year has dwarfed that of its PGM peers, having added more than 65% year to date. The trend bias remains firmly up for the commodity although it does trade in overbought territory at present. In the very short term, the price appears to be consolidating between the 780 (support) and 860 (resistance) levels. A continued consolidation could equate to the correction from overbought territory. Traders respecting the long-term uptrend might consider looking for long positions on a price reversal near the support of the range consolidation or break of the resistance of this range.
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