Commodities

Technical Analysis – Palladium futures’ correction looks to test 50-day moving average

Posted on November 11, 2019 at 3:31 pm GMT

Anthony Charalambous, XM Investment Research Desk

Palladium futures’ sharp pullback suggests that negative sentiment may be increasing, as it approaches the 50-day simple moving average (SMA), presently at 1660. Noteworthy, is the easing in the 20-day SMA’s slope, which could be the spark for the negative scenario. The bearish picture follows a three-month ascent, which commenced on August 2 from the 1376 level.

The short-term oscillators confirm that negative momentum is increasing. The MACD has distanced itself below its red trigger line in the positive zone, while the RSI – having already crossed below its neutral mark – is falling in bearish territory. Yet, this conflicts with the bigger positive view reflected in the widening and upward slopes in the 50-, 100- and 200-day SMAs.

To the downside, initial support comes from the 50-day SMA at 1660 before the 1636 level, which is the 38.2% Fibonacci retracement of the up leg from 1376 to 1796.43. Piercing lower, the key support of 1598 could be a tough obstacle to overcome, with the 100-day SMA beneath it at 1580, coming next. Even lower, the 1561 support from September 18 could interrupt the test of the swing low of 1511.

Reversing higher, first to apply the brakes is the 1700 resistance from the swing low of October 23. Next to challenge the climb is the resistance of 1729 and the nearby 20-day SMA at 1741. Advancing further, the 1780 resistance could halt the test of the fresh all-time high of 1796.43.

Overall, the short-term looks bullish above 1598. However, a shift below 1561 would increase the odds for further declines.

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