Platinum - BUY - 5th October 2021




Platinum - BUY - 5th October 2021 (Closed)


Good morning team,

Today we are taking a look at Platinum (MT5 code: XPTUSD).

WPIC – World Platinum Investment Council – Key Highlights:

Fundamentally, despite semiconductor shortages, automotive demand grew 75% for Platinum.

Automotive demand jumped 75% (+285 koz) year-on-year in Q2’21 as global light vehicle production recovered from the pandemic. Had it not been for stoppages across the world, as the semiconductor shortage persisted, demand for platinum would have been higher – by an estimated 50 koz. Automotive platinum demand increased most noticeably in Europe (82%, +127 koz) due to a combination of the implementation of Euro 6d and some platinum for palladium substitution gains, and despite a further fall in the portion of diesel car sales. So too there were significant rises in North America, where vehicle production surged, lifting platinum demand by 130% (+51 koz). This demand category is expected to rebound strongly this year, up 22% (+529 koz) on 2020 and is also higher than 2019 (+2%, +58 koz).

Industrial demand rises 46% and exceeds pre-COVID levels
The recovery from COVID was particularly evident in the industrial segment which rose 46% (+188 koz) on Q2’20, and 10% (+54 koz) on Q2’19. The use of platinum in industrial applications is expected to increase by 25% (+493 koz) in 2021.

To read the full platinum breakdown you can head to the WPIC document here:

https://platinuminvestment.com/files/165890/WPIC_PR_PQ_Q2_2021_20210909.pdf

The report suggests Platinum faced an oversupply due to mines operating at a 97% capacity alongside semiconductor shortages which has put downside pressure on demand over the recent 6 months.  However, with overall demand forecast to rise across a number of industries due to the economic recovery, they are expecting the supply v demand formula to rebalance, which should result in prices increasing.

Platinum Weekly Chart

The long term bearish trend has broken to the upside. The bearish trend has been intact since the 2008 peak. Platinum has retested the same structure and had a small bounce. 900 support is crucial. The downside pressure on platinum has been a result of oversupply which is expected to rebalance over the coming months.

Platinum Daily Chart

There is a MACD bullish divergence coming into play which has spotted reversal opportunities on a number of occasions over the past 5 years. Price action has set up a lower low whilst the MACD sets up a higher low, indicating bears are running out of momentum. We can also see the 900 support level is a crucial zone, used as both support and resistance previously.

Platinum 4 Hour Chart

Trade Setup: BUY market execution – Entry price 967, stop loss 900 and take profit target 1: 1145

Stop loss: 67 pips

Take profit: 178 pips

Contract sizing on Focus and Fusion are the same:

1 contract = $100USD per pip

0.1 contract = $10 USD per pip

0.01 contract = $1 USD per pip

 

Trade Setup
BUY - Market Execution

Entry
967

Take Profit
1145

Stop Loss
900