Back on January 28th, I wrote about a possible top forming in Platinum. My conclusion, which was "the chart is starting to support a bigger correction", proved to be true. This market has made a deep pullback and is now approaching the 78% retracement of the 8-16-2018 low and the 1-16-2020 high at 819.70. This level is inside a possible support zone between 846.40 and 803.00. I would expect some sideways action inside this area before attempting a rally. This market has already hit an upside resistance zone between 912.90 and 922.80. One of these two areas will need to be taken out for this market to make it's next big move.
Platinum has continued its sell-off since my January 28th post. The question now becomes how much lower can it go?
Watch the 945.60 to 921.70 range. This area is a subsection of my proprietary Fib support zone. I have narrowed this larger zone based on the 4 measured moves made on its 240M chart. The primary and secondary ABCD patterns both have deep retracements, which signals a weak down trend. The decreasing nature of the time ranges (16 to 23 to 9 to 7 to 7) signals momentum is starting to wane. We typically see moves bottom out as these time ranges shrink. The deepness of the two primary ABCD patterns also indicates we could see a healthy pop once a low is made.
I anticipate a move lower into this support zone followed by some sideways action. I would then expect a rally to test the recent highs. Whether or not this re-test will fail or not is anyone's guess.
Platinum prices stalled @ 1046.70 on January 16th, which was inside the middle of my proprietary Fib resistance zone. Is this the start of a bigger correction or just a temporary pullback before making new highs?
- Let's digest the chart for clues:
- Jan 16th high made on selling (black candle), which is bearish.
- Jan 16th high made near the monthly R2 pivot @ 1041.00, which can be an overbought level.
- Jan 16th high corresponds with 3 major swing highs from 2017 and 2018. All of them saw big sell-offs afterwards.
- Price action has since fallen more than the previous 3 retracements off the Nov 12 swing low. This breaks the symmetry of this up move signaling a bigger correction could be coming.
- Large traders have record net long positions as of Jan 21st, which is bearish.
- The MACD formed a bearish crossover yesterday.
The chart is starting to support a bigger correction.
The Platinum market is in an uptrend. Prices are making higher highs and higher lows on both the daily and weekly continuation charts. In addition, both charts shows prices above their respective 50 DMA and 50 WMA. Therefore, the current market condition is to buy dips.
However, price action is starting to show early signs of a correction based on the rally that started from the 11/12/19 swing low:
*dominant ABCD pattern with a medium deep retracement followed by a supporting abcd pattern with another medium deep retracement signals a weak uptrend (bearish)
*price action currently trading inside low end of my proprietary Fib resistance zone (bearish)
*COT report shows large traders are holding record long positions (bearish)
*seasonal bias shows prices typically fall mid-February to late March (bearish)
I will continue to monitor this market and provide updates when warranted.