The rand platinum price has broken out of a multi-month consolidation, which augurs well for platinum stocks, despite its pullback in recent days. The chart shows its target.
Rand platinum price: A recent breakout .
Recommendation: Buy platinum stocks on pullbacks
Trend (rand platinum price): Short term up. Medium and long term sideways to up.
n The rand platinum price (middle) has broken out of a large symmetrical triangle (lines 1 and 2).
n The bottom window is the JSE platinum index. There is a fairly good correlation between platinum stocks and the rand platinum price, as is evident there. Therefore, platinum stocks should continue to make their way higher over time, given the recent breakout in the rand platinum price.
n Buy large-cap platinum stocks on minor pullbacks. This will continue to be the strategy for the coming months. Right now, a pullback to or near line 2 (R15 100 or R15 070 an ounce) will certainly be buyable for platinum stocks on the JSE.
n The target is up to R17 700, based on the height of the triangle, lines 1 and 2, projected up. (It was trading at R15 518 at the time of writing).
n To the downside, in terms of stops, a close below line 3, that is below R14 700, will put this breakout in doubt.
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.