Analysis

Palladium remains underpinned in high ground, having set a fresh 2016 peak at $749.50 per oz last week.

Selling pressure have been well received so far, as implied by the longer lower shadows on the recent daily candlestick formations. But the failure to make further headway suggests the metal lacks momentum.

This is reflected in the stochastics, which have converged in high ground, and the RSI, which looks overbought.

Immediate support is seen around $725 per oz from the early-October high. Additional support is seen between $693 and $670 per oz, where the 20, 100, 55 and 40 DMAs are clustered.

Support below is seen at $611 (the 61.8% Fibo of the June-August rally), at $604 (200 DMA) and at $591 from the medium-term rally. A break higher would target the band of resistance at $780-830 from October 2014-May 2015.

 

Conclusion

Palladium is holding in high ground despite absorbing a sizeable amount of ETF liquidation and may get a lift from the renewed bullish sentiment in the wider commodity complex. But the fact the metal is struggling to make serious headway above $745 per oz suggests gains continue to release pent-up scrap supplies and that some consolidation may be necessary in the short term.

Source: The Bullion Desk