Commodities

Technical Analysis – Are palladium futures completing a bullish cycle?

Posted on February 6, 2020 at 10:41 am GMT

Christina Parthenidou, XM Investment Research Desk

Palladium futures have been well supported by the 20-day simple moving average (SMA) recently, but the bulls seem to be struggling to overcome previous record high levels around 2,400, with the price registering a negative candle on Wednesday.

The price continues to lose ground on Thursday, increasing speculation of a bearish double top pattern as the momentum indicators are shifting south; the RSI and the Stochastics topped near overbought levels and are turning lower, while the MACD seems to be resuming negative momentum below its red signal line.

Therefore, the focus will likely be on the 20-day SMA. If it fails to curb downside movements this time, the door would open for 2,150, which could be a neckline area in a potential double top formation. This is also where the 23.6% Fibonacci of the upleg from 1,375 to 2,424 stands. A decisive close below that zone could trigger a sharper sell-off if the 2,100 former resistance region proves easy to pierce, with the 50-day SMA and the 38.2% Fibonacci of 2,024 likely coming next in defense.

On the flip side, a rebound near the 20-day SMA could ease fears of a slowing market, allowing more buyers to enter. The spotlight would turn to the 2,400-2,424 resistance area in this case, a break of which could generate fresh all-time highs probably somewhere near 2,590 (161% Fibonacci extension of the 2,424-2,150 downfall).

In short, Palladium futures are likely to face negative pressure in the short-term, with traders eagerly waiting to see whether the 20-day SMA will come in rescue once again, deterring the creation of a bearish double top pattern.

commodities Palladium Futures

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