LPPM WEEK – Palladium weekly – Can it sustain gains on rising fundamentals?

Otmane El Rhazi from The Bullion Desk.

Short Term: Medium Term: Long Term: Resistances: R1 803 May high R2 807 50 WMA R3 821 Upper BB R4 833 March high Support: S1 783 7 WMA S2 782 21 WMA S3 752 April low S4 746 January low Stochastics: Legend: Fibo – Fibonacci retracement level MACD – Moving average convergence/divergence WMA – Weekly moving average BBs – Bollinger bands Technical Comment Analysis Palladium continues to consolidate in its recent sideways range between conflicting short- and long-term price pressures. The 7 WMA at $783 has crossed above the 21 WMA at $782 – a sign of sustained short-term upside pressure.  The stochastics have turned lower in the strong rang. This points to reduced buying strength below the 50 WMA at $807, which has been capping prices.  With the MACD and momentum both continuing to drift higher, downside pressure above the 7 WMA appears to have eased. The convergence in the BBs has slowed. This signal of reduced breakout pressure suggests further consolidation while the metal looks for direction.  Conclusion Palladium is pulling back to retest support from the 7 WMA after again finding resistance below the 50 WMA. We remain neutral-positive while the metal continues to consolidate above the 7 WMA in its sideways trading range. We will look for the rising 7 WMA to trigger a renewed challenge of the 50 WMA, which would confirm sustained short-term upside pressure.    Key Events Since this is LPPM Week in London, the PGM markets are likely to come under increased scrutiny. This may result in increased price indecision while investors await confirmation of the new consensus.  The dollar looks to have found support from the bottom of its previous trading range at 93.25; it is now pulling back higher. A continued reversal would return downside pressure to prices, capping gains again. Beijing has made another interest-rate cut, its third in six months, to spur lending and help bolster growth in the faltering Chinese economy. But weak new loans and money supply data indicates that these measures are yet to take effect, making further monetary stimulus likely. With Chinese equities looking to have got ahead of their fundamentals and Beijing having already taken steps to dampen gains, any rotation out of equities could trigger a reversal in falling physical purchases. All trades or trading strategies mentioned in the report are hypothetical, for illustration only and do not constitute trading recommendations.

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