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Oil, platinum prices set to rise
Colin Abrams
Posted: Mon, 22 Oct 2007
[miningmx.com] -- THE COMMODITY markets are continuing sharply higher – and that includes arguably the most important commodity of them all: oil.
The oil price is making all-time highs on a daily basis; the question is whether that’s sustainable. We look to the chart of Brent crude for some clues.
We also look at a chart of the US dollar platinum price, which is also making new highs by the day. Its chart gives a clear upward target. The platinum price is overbought over the short term but has a far higher target on the larger timeframe.
The charts show more upside potential in Brent crude, although it’s approaching a solid resistance level.
For more recommendations and charts by the author on shares, stock indices and commodities, please go to www.themarket.co.za.
BRENT CRUDE – APPROACHING RESISTANCE
Trend: Up.
Strategy: Hold with a trailing stop.
Click on image to enlarge
(Daily)
* Brent Crude is heading speedily towards line 2 of a large broadening formation (with line 1).
* The relative strength index (RSI, on top) is not yet fully overbought, which points to more upside to come, at least over the short term. (However, the weekly RSI, not shown, is becoming overbought.)
* Keep holding if in (via the futures market). But use a breaking of the prior three-day low as your trailing stop-loss (to protect profits).
* The target is line 2 at the US$87 level on Brent crude. (Note: The prices of Brent crude and New York crude are different.) The price of Brent at the time of writing was $83,30.
* Any pullback to the $80,50-$79,50 zone can be used for buying again. The trend remains up, but there will be pullbacks along the way.
PLATINUM (US$) – HIGHER TARGET
Trend: Short term up, but overbought. Medium and long term up.
Strategy: Tighten current stops and re-enter after a pullback.
Click on image to enlarge
(Daily)
* Earlier this year platinum broke out of a large broadening formation (lines 1 and 2). It’s still pointing to a higher (longer-term) target to come. It has now reached a target from a smaller channel (lines 3 and 4).
* The daily RSI is overbought and giving a negative divergence, which is warning of a temporary pullback to come.
* Tighten stops if you’re holding platinum to a breaking of the prior three-day low. Then re-enter on a pullback to $1 390 (on an upward reversal from there or lower). Pullbacks are buyable on an ongoing basis here until the large target is reached.
* The large upside target is $1 560 – ie, the height of pattern 1-2 projected up. (But there will clearly be pullbacks along the way.)
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