The forecast made at the beginning of last week about the dynamics of palladium prices is fully confirmed. A new attempt to break the downtrend line failed, after which the "bears" seized the initiative once again and drove the quotations to new lows of the year. However, today we see another growth impulse, which pretends to break the falling trend. Will this attempt be more successful than previous ones?
Forecasts of the price for palladium, in contrast to other precious metals, show very cautious estimates. Thus, according to StoneX, palladium will grow only by 2.3% in 2023, and its long-term value continues to be uncertain. The main reason is that the automobile industry is using cheaper platinum rather than palladium.
At the same time, there may soon be serious problems with both palladium and platinum in terms of their production. South Africa, which supplies about 70% of platinum and nearly 40% of palladium to the global market, reports a possible 20% decrease in production of these metals this year due to not enough investment in the expansion of mining companies, as well as due to power disruptions.
So, the situation for palladium is not that bad from the fundamental point of view, but the technical picture still cannot be proud of the preconditions for a significant price increase. For a large-scale rise, it is necessary to get not only above the trend line, but also above the 1700 level, which was not possible to get last week.
For greater reliability of the transaction is better to wait for the closing of the trading session above the downtrend line, and then open long positions, expecting the continuation of the movement further, to the level of 1700. If the price pulls back down again, the target of moving to the 1600 level will be relevant.
The following trading strategy option can be suggested:
Buy palladium at the closing of the trading session above the downtrend line. Take profit – 1700. Stop loss – 1640.
Also, traders may use Trailing stop instead of a fixed Stop loss at their convenience.
This content is for informational purposes only and is not intended to be investing advice.
