For more than a week of platinum (precious metal, commonly used in catalytic neutralizers that reduce automotive engine emissions) demonstrates increased volatility. February 16 "White Metal", which until recently lagged behind his colleagues, overcame a mark of $ 1300 per ounce for the first time since September 2014.
Platinum takes place primarily due to the prospects for growth in demand, since the Bayden administration can tighten the rules regarding the purification of vehicle emissions as the US economy is restored. As a result, some deficit can be expected, since the demand from automakers will grow.
Another reason for the volatility of platinum is its status asset "Quiet Harbor" in the eyes of many market participants. Also, metal is considered as a means of protection against inflation against the background of the failure of a recent gold rally. The technical picture is not so unequivocal, but it reinforces fundamental optimism regarding metal prospects.
We believe that from last week there is either the incident flag or pennant. Both models are equally optimistic and have the same dynamics. Each of them usually follows a sharp jump and is a figure continuation figure.
Psychology is simple: the initial "bulls", which caught a 25 percent movement from 4 to 16 February, now fix profits. At the same time, new players, upset by the fact that the rally missed, now recognize the "bullish" nature of the market and hope for a re-movement.
Ascending breakdown demonstrates that demand absorbed all available offer, and now buyers are forced to look for new sellers beyond the boundaries of the model. This signals the preparation of the next round of growth.
In addition, the samples usually launch the domino effect when the triggering stop losses force traders to deploy positions, and those players who still remained aside recognize the aspiring nature of the market and only strengthen support.
Another sign of significance of the model is its location on the schedule. The figure was formed directly at the top of the rising channel, originating from March minima. This is consistent with the current market attempts to overcome the trend line resistance, which reflects the angle with which the offer is ahead of demand.
In this dynamics, the flag / pennal is the market version of the "slingshot". The trend must be accelerated to overcome the resistance of "bears". As soon as this happens, the resistance will turn into support, which is also consistent with the previous statement of the effects of the flag / penal breakdown.
Perhaps now a great time to remind readers that the price storms the top of the rising channel, which means that the breakdown has not yet been completed. Turn and re-testing the bottom of the channel remains a plausible scenario.
The model is dynamic, which explains recent volatility. That is why it is so difficult to determine the correct trend lines.
Flag falls along a solid black or dashed red line? Or is it a pennant based on the dotted line? We are not sure. That is why the analysis of diagrams is purely subjective (which is the main criticism of technical analysis). But it is precisely this and distinguishes the master from the novice. There is no clear arch of the rules, and you can only buy a skill at the expense of many attempts and analysis of failures.
So, if the boundaries of the template are not obvious, how do we know when he ended? In fact, we do not know for sure, but the following factors will increase the likelihood of proper interpretation:
- Please note that the upper limit of the model is clearly defined. It is she who bothers us first when waiting for the ascending breakdown.
- The position of the place where the vertex of the model meets with the upper boundary of the channel (marked with a red cross).
- As part of the range, positions are accumulated, as evidenced by long shadows of candles; It is possible that everything will end with a long candle overlapping the remaining candles within the range of the range. In fact, it may be an argument against the pennant, since the candle of February 12, where the estimated bottom of the model begins, it is not really overlapped by the rest of the candles.
Trading strategies
Conservative traders should wait for an upward breakdown, which will help the prices to overcome the maximum of February 16 at $ 1348.30; Subsequent rollback and re-testing of the top of the flag or the upstream channel must confirm the integrity of the model.
Moderate traders will wait for a breakthrough of a psychologically round mark of $ 1300; Following rollback will provide a more advantageous risk ratio and potential profits.
Aggressive traders can take a chance and buy on the closure above the Red Cross. It goes without saying that they should carefully read the entire article, as well as make a well-thought-out trading plan, which they will strictly adhere to.
An example of a position
- Login: $ 1275;
- Stop Loss: $ 1250;
- Risk: $ 25;
- Target: $ 1350;
- Profit: $ 75;
- Risk ratio to profits: 1: 3.
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