Platinum and Silver May Be Nearing Bottom

By Peter Aan

One thing I look for on a bar chart when a bottom appears to be forming is a close above the high of the low bar.

It is an early indication that the market is serious about changing direction. Just find the lowest point reached for the move, look at the high of that bar, and look for a subsequent bar with a close above that (just reverse this when looking for a market top). Any significant extended bull market will do this, so it is another “piece of the puzzle” when analyzing a chart. This can apply to any chart (daily, weekly, or monthly) and the longer the time frame, the more significant the bottom. For the weekly charts of the precious metals markets, Platinum and Silver look like they will do it today, Gold needs a weekly close above 1132.50, and Palladium needs a close above 626.55.

Gold sold off on Thursday, but is a little higher this morning. We are now at the overbought line on the Bollinger Bands, but higher prices and more new highs for this move still seem most likely.

Silver also sold off yesterday, but is recovering this morning. Higher prices and movement towards 15.900 is still on the horizon.

Platinum and Palladium are showing more strength this morning than are Gold and Silver. We are currently about $10 below the Bollinger Band overbought level, but I don’t see this as much of a barrier to higher prices.

Palladium managed (barely) to take out the 626.55 high (September) I mentioned Wednesday morning, sold off on Thursday, but is showing some strength this morning. Another penetration seems likely, leading to further movement towards the July 23 high of 641.50 mentioned earlier.

Peter Aan joined Dillon Gage in 1983, and is currently a metals trader for our metals division. He is the author of numerous articles for Futures magazine and Stocks and Commodities magazine. He is the author of The Relative Strength Index: A Comprehensive Research Report and a co-author of Trading Tactics: A Livestock Futures Anthology, published by the Chicago Mercantile Exchange.