Technical Analysis – Palladium’s correction from all-time peak could be short lived as positive structure holds

Anthony Charalambous, XM Investment Research Desk

Palladium futures look to have encountered significant support from the 50-day simple moving average (SMA) and the 2,250 level, which is the 38.2% Fibonacci retracement of the up leg from 1,376 to 2,786.16. The retracement off the fresh all-time high of 2,786.16, is aided by the negative momentum reflected in the technical oscillators.

The MACD, is in the positive area but is distancing itself below its red trigger line, heading towards the zero level, while the RSI weakens, steering into the bearish region. That said, the rising SMAs warn of the prevailing bigger positive picture.

Retaking the reins, sellers may confront initial support revisiting the 50-day SMA at 2,290 and the 38.2% Fibo of 2,250. Breaching these obstacles, the lower Bollinger band underneath at 2,210 may apply some hindrance ahead of the key low of 2,150. If selling interest persists even past the 50.0% Fibo of 2,085, the 100-day SMA at 2,040 could draw attention before the inside swing high of 1,972 from December 17.

If buyers manage to surpass the 23.6% Fibo of 2,456 and capping mid-Bollinger band, the 2,540 high could be next to test the climb. Pushing past this, the commodity could overstretch till the upper Bollinger band before revisiting the neighbouring peak of 2,786.16. Overcoming the top, the 2,869 level, which is the 261.8% Fibonacci extension of the down move from 2,425 to 2,150 could challenge buyers ahead of the 3,000 psychological number.

Overall, the very short-term is cautiously bearish, while the medium-term picture sustains an advancing outlook.