The JSE platinum index has been moving sideways in recent months and is building up for a large move.
It can give a break-out in either direction, as shown on its chart alongside.
JSE Platinum Index
Recommendation: Wait for new break-out direction.
Trend: Sideways on all main timeframes.
Strategy: Buy a close above line 2 or sell short on a close below line 3.
- The platinum index is in a medium term ascending triangle (lines 1 and 2). It is currently testing line 1 support, as well as short-term support at line 3. It can break out in either direction, but either way, something big is brewing here.
- For now, the best strategy is to wait for a closing price above line 2 (54.00) to buy platinum stocks; or a close below line 3 (48.00) to sell them short. Do whichever happens first. (At the time of writing this index was at 49.00).
- For an upside break-out the minimum target will be 64.50. For a break-down, it will be to 40.00. These targets are based on the height of the triangle projected up or down, respectively.
- For buying a break-out above line 2, the stop-loss, as a general guide for
platinum stocks, will be a close below 50. For a break-down for shorting, the stop will be a close above 50.
* Colin Abrams is an independent technical analyst. To subscribe to more recommendations by the author, or attend his courses, please go to www.themarket.co.za.