Platinum May Retest High After Double Bottom: Technical Analysis
Platinum may rise 4 percent to challenge this year’s high reached in February after forming a “double bottom,” according to Hiroyuki Kikukawa of Nihon Unicom Inc.
The price of the metal for immediate delivery could reach $1,647 an ounce on a closing basis after hitting the first low of $1,568.75 on March 4 and the second of $1,557.25 on March 19, said Kikukawa, the general manager of research at the Tokyo- based brokerage. Spot platinum rose 0.3 percent to $1,584.50 an ounce at 1:18 p.m. Tokyo time.
Platinum, used to make autocatalysts and jewelry, has risen 2.9 percent this year, outperforming gold and silver, on increased demand from the auto industry and amid supply disruptions at mines. A double bottom is a chart pattern showing a drop in price, followed by a rebound and then another decline to near the same level, usually indicating support.
“Technically, platinum still remains bullish,” after touching an almost seven-month low of $1,385.00 on July 24, 2012, Kikukawa said. The price may reach $1,626 in the short term, a 38.2 percent Fibonacci retracement from the March 19 low, according to Kikukawa.
Fibonacci studies are based on the theory that prices rise or fall by certain percentages after reaching a high or low. In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.
To contact the reporter on this story: Jae Hur in Tokyo at email@example.com
To contact the editor responsible for this story: Brett Miller at firstname.lastname@example.org