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Focusing on commodities, we show an interesting chart of Brent crude oil that’s formed a bearish medium-term pattern. That’s positive for motorists and implies a further easing of fuel prices.
We also update a chart of the platinum price, shown here some weeks back. It broke below support and is heading towards an important support level. Commodities have lower short-term targets but are still bullish long term.
BRENT CRUDE – lower target
Trend: Short and medium term down. Long term up.
Strategy: Traders sell short the minor bounces.
* The oil price has formed a medium-term head and shoulders (as labelled). It recently broke down below line 3 (the “neckline”) to confirm that bearish pattern.
* Lines 1 and 2 form a large broadening formation (or “megaphone”).
* The only potential bullish sign over the short term is that the stochastic oscillator (on top) is oversold. But currently give the head and shoulders priority.
* Traders sell short the minor (eg, two- to three-day) bounces. Don’t take large positions because of the oversold stochastic. Note: The longer term picture is still bullish.
* The short-term target is down to US$98/barrel (spot price), based on the height of the head and shoulders projected down. That’s also the approximate target given by pattern 1-2. (At the time of writing Brent was at $106,38/barrel.)
* The initial stop-loss for shorts is a close above $111,10. Note: When the price gets to its 200-day moving average (at $102) lock in partial profits and lower your stop.
PLATINUM (US$) – nearing target
Trend: Short term down. Medium term sideways. Long term up.
Strategy: Take shorting profits lower down.
* The platinum price broke to the downside of a symmetrical triangle (lines 1 and 2) shown in this column a few weeks ago. (At the time the breakout could have been in either direction.)
* The minimum downside target is US$1 635, as measured by the height of the triangle projected down. That target also coincides with line 3 support.
* The only potential positive here is the stochastic, which is oversold, which indicates that a rally isn’t too far off – but most likely only after it reaches line 3.
* If you sold short as per our recommendation some weeks back, look to cover your shorts – ie, take profits (buy them back) – as the price gets to the $1 635 target at line 3. (Note: It’s possible the price will drop slightly further than that – eg, to $1 590 – but at our target it will be a decent short-term profit.)
* Long term, precious metals are still positive – but gold is stronger than platinum.
Please note: For more recommendations and charts by the author on shares, indices, commodities and currencies please go to www.themarket.co.za.
We also update a chart of the platinum price, shown here some weeks back. It broke below support and is heading towards an important support level. Commodities have lower short-term targets but are still bullish long term.
BRENT CRUDE – lower target
Trend: Short and medium term down. Long term up.
Strategy: Traders sell short the minor bounces.
* The oil price has formed a medium-term head and shoulders (as labelled). It recently broke down below line 3 (the “neckline”) to confirm that bearish pattern.
* Lines 1 and 2 form a large broadening formation (or “megaphone”).
* The only potential bullish sign over the short term is that the stochastic oscillator (on top) is oversold. But currently give the head and shoulders priority.
* Traders sell short the minor (eg, two- to three-day) bounces. Don’t take large positions because of the oversold stochastic. Note: The longer term picture is still bullish.
* The short-term target is down to US$98/barrel (spot price), based on the height of the head and shoulders projected down. That’s also the approximate target given by pattern 1-2. (At the time of writing Brent was at $106,38/barrel.)
* The initial stop-loss for shorts is a close above $111,10. Note: When the price gets to its 200-day moving average (at $102) lock in partial profits and lower your stop.
PLATINUM (US$) – nearing target
Trend: Short term down. Medium term sideways. Long term up.
Strategy: Take shorting profits lower down.
* The platinum price broke to the downside of a symmetrical triangle (lines 1 and 2) shown in this column a few weeks ago. (At the time the breakout could have been in either direction.)
* The minimum downside target is US$1 635, as measured by the height of the triangle projected down. That target also coincides with line 3 support.
* The only potential positive here is the stochastic, which is oversold, which indicates that a rally isn’t too far off – but most likely only after it reaches line 3.
* If you sold short as per our recommendation some weeks back, look to cover your shorts – ie, take profits (buy them back) – as the price gets to the $1 635 target at line 3. (Note: It’s possible the price will drop slightly further than that – eg, to $1 590 – but at our target it will be a decent short-term profit.)
* Long term, precious metals are still positive – but gold is stronger than platinum.
Please note: For more recommendations and charts by the author on shares, indices, commodities and currencies please go to www.themarket.co.za.
