AdrianRaymondFX
Long

Cyclical low being set in platinum market ?

FX:XPTUSD   Platinum/U.S. Dollar
I've been watching platinum             closely for the past month and a half as I discovered a mean-reversion pattern that has repeated itself several times since 2011.

Using a 200-Day Disparity Index , which measures how far current price is from the 200-Day Exponential Moving Average (EMA200), you can clearly see that platinum             tends to set cyclical lows when it is around 17-20% below its EMA200. Significant bounces have also occurred when the DI200 is only at -13%.

Since November, platinum             has stabilized above the $1180 handle. The fact that this corresponded to the metal being at parity with gold             is worth noting. Check out the descending trend line that has thus far allowed for a limited technical bounce the past couple of weeks. The May/June 2012 and June 2013 lows were set on this trend line , and platinum             bounced all the way back to and even above its EMA200 afterwords.

The EMA200 is currently at $1355, and it will slowly descend as time goes by. If platinum             manages to remain above the $1180 level by the end of the year, I think there will be some upside potential at the start of 2015 just like there was at the beginning of 2014. I therefore believe it's worth entertaining the idea of going long in the platinum             market towards the end of December when it might be a little more clear as to whether or not price will remain above $1170-80$. If so, a stop at around $1140 should be good enough to be able to target the EMA200 during the first couple of months of 2015.
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