Platinum has been looking very strong from the end of November when it has become increasingly clear that demand is expected to outstrip supply this year and next. See a recent article on that here.
Now, on top of this physical demand, seasonal demand picks up at this time of year for Platinum. If we take a look at the last 25 years of price movement in Platinum between December 16 and Jan 31 we notice the following key points:
- Price has finished higher 19 times out of those 25 years.
- The average gain in price has been +5.14%.
- The maximum profit has been +15.55%.
- The largest loss was -4.76% in 1996.
- The maximum drop was -6.48% in 2015, but the drop recovered to a -0.67% loss.
- The maximum rise was in December 2008 with an 18.36% rise. That year turned into a 15.26% gain.
- The annualised return of that time period (if the average return was calculated for a year) would be 48.95%.
So, we have the fundamentals aligning. In terms of the technicals – stay above the trend line market on the chart below and buyers are in control. This trend line can be used to define and limit risk in the near term. If price break though it to the downside then longs can be taken off. If price then breaks back above longs can rejoin. The market is flowing quite freely, so we should continue to see clean moves. The only risk with this approach is if ranges narrow and price starts going above and below the line multiple times. In that case you could allow for a 2% break of the line either way as your trigger.