Platinum Monthly
Chart courtesy of Tradingview.com
The old "Sell in May and go away!" saying is not working these days with precious metals. Both Gold and Silver did very well, moving upside beyond recently unforeseen levels in May.
As seen in the above monthly chart, Platinum is still in a long correction from the summer of 2011 after it hit $1918. Platinum lost almost half of its price, searching for the bottom for the last 6 months. It was a hard time for the traders, as stops were hit both in longs and shorts, but what is worse is that most traders could lose patience and belief in the metal.
April shaped well known "Doji" candlestick which usually indicates a reversal. It will be confirmed if the price closes above April's high of $1185. At the moment, the May price advanced higher by $24 and reached $1169 and needs some more to overlap April's maximum.
The last attempt to take off of the Falling Wedge's downside was made in January this year, but Platinum couldn't break further above June's 2013 low at $1289 and fell back sharply for 2 consecutive months. March's low is a local minimum so far, located at $1086 and acts as the first support area.
My suggested trade setup is as follows: Buy at the current level of $1156 with a stop below $1086 as your first support level. Add the second part above $1289 with the first resistance area and buy the last part above $1480 on the break of the Wedge's upside. Target is at $2300. March 2008 high looks unreachable, but if you notice how metals can move when they break out of a sideways pattern, you can find it appropriate. The risk/reward ratio is huge, 1:16 (for the first buy).
Palladium Monthly
Chart courtesy of Tradingview.com
Palladium is more vivid compared to the other precious metals, as you can see in the above monthly chart. It never stops at the same level for a long time and makes zigzags one by one without a rest.
Palladium is in the long-term expanding uptrend (highlighted in blue) from 2005. As you can see, there is an abnormal false break that happened in 2008 amid the financial crisis. Palladium took a shocking nose dive from the $475 level down to the $160 level, losing more than half of its price. And then made a shocking move up back to the $475 level and even higher levels, charting a "V" curve.
March Palladium fell sharply from the $832 level and moved down to reach the bottom of the uptrend at the $700 level, but was stopped at $723, losing more than $100. April started with good upward momentum and Palladium gained back almost half of what it had lost in March.
My suggested trade setup is as follows: Buy at the current $780 level, put stop below the $700 trendline support, add above the $912 midterm peak. First target is set at $1090 major resistance (2001 high); the second target is set at the $1250 level (uptrend's upside). The risk/reward ratio is 1:4, quite sound (first buy)!
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.
