Metals have received much attention in recent days due to factors such as the Fed announcement, the Brexit, trade war, etc.
Given the news along with the rising prices of all metals over the past months, it could be an interesting time to take a look at the charts to see what price action could they be signalling.
When someone mentions metals, most attention will go to gold. Shining metal tends to perform well when investors get nervous about the future, and it is a popular hedge option against inflation and market volatility.
Followers of technical analysis will often look to exchange-traded products such as the SPDR Gold Shares (GLD) for insight into the future direction of the market.
On the monthly chart, one thing is fascinating – the current price. Six years ago, on August 1st, 2013, the price was at the same level as today at 141. It is hard to tell whether history will repeat itself; however, for those who don`t learn the lessons will occur again. Since last year the price has been in an uptrend with just one consolidation period, which has confirmed the future price development. At this point in the long term time frame, we have RSI at an overbought level. The time to cool down maybe in front of us.
On top of that on the daily chart, we have divergence, one of the commonly used trend reversal signals in technical analysis.
As the rarest of the precious metals, platinum often appeals to active traders as the purest way to trade increased attention in metals. The ETFS Physical Platinum Shares, PPLT, is the most common ETF used as a barometer for tracking the price of physical platinum.
On PPLT monthly chart, beside of long downtrend price movement, we can notice the value of RSI which is under break or makes 50 levels. Since April 2016 the price doesn’t have enough power to break and sustain above 50 level.
A daily chart can draw our attention to MA200 and RSI value. It is evident that PPLT has high volatility, and the price movements can be very sharp. At the moment the price is above MA200 and at RSI 50 level. It can be crucial for future price movements, whether the price will break the RSI level and hold above MA200.
In this situation, the price level of MA200 will remain our support level. We will be carefully watching what might happen in the next days. Puts are one way to go.
Traders are also gaining attention as the price of copper, zinc and aluminium is on the rise. A typical fund used by traders to track a basket of those is Invesco DB Base Metals Fund, DBB.
The monthly chart of DBB holds powerful technical price formation of Head and Shoulders. To this days even kids know how to use this trend reversal technical pattern. We will adhere to that if the price holds/confirms neckline (red line) potential target which should be found at 12.23 level.
Here on DBB daily chart, we have the price well below MA200, which is confirmed as a reliable resistance area since June 2018. Next thing to note is sharp down move. The price dropped below its ex support level at 15.00. The price may continue in the same manner, but it is also likely to see a rebound, previously. After all, smaller contraction is always present after a more significant price action. The RSI current level also implies the same thing might happen sooner or later.
Metals are in the spotlight for many followers of technical analysis.
The price action can clearly define risk/reward setups and to make this segment of the commodities market look poised for future fall over the coming weeks or months.