Platinum futures made a major U-turn during Monday's session to give up most of the gains posted at the end of last week's volatile trade. The sell-off was in lockstep with gold, which is has been holding steady near par value relative to platinum as both markets consolidate in anticipation of a longer term trend to develop.
Platinum's decline stalled at key support provided by the bottom of a wide Channel Down pattern, illustrated here on the 240-minute candlestick chart. This support was established at the previous swing low price of $1,770 per ounce which also coincides with Monday's low. While the lack of follow-through from last week's rally casts short term doubt on the potential for a rally, the fact that this support held firm indicates range-bound trade inside the channel may prove the path of least resistance for the rest of the trading week.
A failure of the channel support with a move below the $1,770 level would be seen as a for more bearish development, as it would signal a downside technical breakout from this formation and invite the possibility of a significant sell-off from the current range.
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