Figure 1 is a weekly chart of the i-Path DJ AIG Platinum ETN (symbol: PGM).
Figure 1. PGM/ weekly
PGM is a sparsely traded (i.e., average daily volume is 20,000 shares) ETN
that tracks the commodity, platinum. Platinum is a precious metal that is essentially
influenced by the same dynamics as gold and silver. Currency debasement, like
interest rates less than the rate of inflation, should be a tailwind leading
to higher platinum prices.
Technically, platinum has been basing for the past year (2010), and it has
not seen the run up that gold or silver has. However, in 2009, this ETN essentially
saw a double (i.e., gained 100%). Referring to the chart, we note the pattern
of higher lows (see blue up arrows on chart). Most importantly, PGM is breaking
over three key pivot points; key pivot points represent the most significant
areas of buying (support) and selling (resistance). A weekly close below the
most recent key pivot point (40.90) is reason enough to step to the sidelines.
But if PGM and platinum move higher, calculations or a measured move suggest
that price is likely to move to $55 or higher.
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