Platinum/Gold Spread: Revise Purchase Parameters For July Trading

Platinum/Gold Spread

Another month has rolled by and the platinum/gold spread once again made a lower monthly high and a lower monthly low. At the June 22nd contract low of -$123.20, the spread has spread wiped out three-quarters of the entire run from the 2012 record low to the 2014 double top. Unless a reversal pattern materializes, the spread remains on track for a return to a double bottom at the nearest-futures record lows at the December 7, 2011 low of -$218.90 and the August 10, 2012 low of -$219.80.

The October platinum/gold spread finds important overhead resistance between the declining 75-day Moving Average around -$62.30 and the June high at -$68.20.

Platinum Gold spread nearest-futures daily (75-day MA)

Platinum Gold spread nearest-futures daily (75-day MA)

A two-day close above the declining 75-day MA for the first time since early August and a close above a previous month’s high for the first time since March and only the second time during this bear market would alter the bearish price structure. This would signal a bullish trend change and, quite likely, the end of the bear market. Therefore, we will continue to use this as an entry signal to get long.

Trade Strategy:

Cancel the current hypothetical order in the October platinum/gold spread and replace it with a new order to buy two 50/oz. October platinum futures contracts and simultaneously sell one 100 oz. October gold contract if the spread makes a two-day close above the declining 75-day MA (currently around -$62.30) or a one-day close above the June high of -$68.20 (premium gold), whichever occurs first. If filled, the initial liquidation plan is to exit on a two-consecutive day close $5/oz. below the contract low that precedes the entry.

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