On Friday the July-June platinum/gold spread closed above the declining 50-day Moving Average for the first time since July. The spread also surpassed a prior month’s high for the first time since early June, which was when the 2014 high was established. This signaled a bullish trend change.
The trend change triggered a hypothetical trade for the blog on the long side of the spread. The trade would have been entered by buying two 50/oz. July platinum futures contracts at approximately $1,160.60 and simultaneously selling one 100 oz. June gold contract at approximately $1,165.40. Therefore, the long position was entered at -$4.80 (premium gold). Initially, the spread will be liquidated on a two-consecutive day close below -$52.80 (premium gold).
We will now be watching the spread to see what sort of volatility it experiences and what sort of chart patterns emerge. If we are lucky, the spread may lend itself to some setups for adding to the position as the new bull market unfolds.