By Dan Eduard – Platinum has seen substantial gains in the last few weeks, as the declining US dollar has increased demand for alternative investments like precious metals. With significant fundamental news on the horizon, technical indicators are now showing that the commodity may finally be in overbought territory, meaning a downward correction is likely to take place.
We will be examining the daily chart for platinum, provided by Forexyard. The technical indicators we are using are the Stochastic Slow, Relative Strength Index and Williams Percent Range.
1. The Stochastic Slow shows a bearish cross has formed above the upper resistance line. This is typically seen as an indication that downward pressure exists, and that a correction may take place.
2. This theory is supported by the Relative Strength Index, which is currently right around 75. Anything above 70 is usually taken as a sign that the instrument is overbought, and that downward pressure is likely to take place.
3. Finally, the Williams Percent Range is currently well above the -20 level, which is widely considered to be the border between being overbought and neutral territory. Traders can take this as a clear sign that platinum prices will drop in the near future.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
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