Trade Recommendation: Platinum/Euro

The Platinum/Euro pair (XPT/EUR) ignited its bull run in June 2016 when it breached resistance of 900. This triggered the inverse head and shoulders reversal pattern on the weekly chart. The breakout attracted trend followers and momentum traders, which pushed the market to as high as 1058.35 in August 2016. In two months, the pair grew by more than 17%.

As the target of the inverse head and shoulders pattern was hit, those who bought the breakout locked in gains. The increased selling activity drove the market down to 835.56 in October 2016. Bulls bought the dip, which started a buying momentum that lifted the pair to 974.39 in February 2017.

Unfortunately for buyers at this level, the lower high snuffed out the market’s momentum. Participants began to dump positions to protect their capital. XPT/EUR became increasingly bearish as it snapped support of 845 in May 2017. It then posted a series lower highs and lower lows until recent events.

Technical analysis show that the Platinum/Euro pair may have bottomed out at 735.54 on April 6, 2018. While it’s not easy to bottom pick the market, one tool that can help predict the bottom is Fibonacci Retracement. This retracement tool indicates that the pair may have hit rock bottom. In addition, a bullish divergence is spotted on the weekly RSI which suggests that reversal is on the horizon.

The strategy is to buy as close to 736 as possible. If bulls defend this level, they will take some time to create a base before climbing to our target of 845.

The process may take a year.

Daily Chart of Platinum/Euro

As of this writing, the Platinum/Euro pair is trading at 739.59.

Summary of Strategy

Buy: Buy as close to 736 as possible.

Target: 845

Stop: 715

 

Featured image courtesy of Shutterstock.

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.