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Since July 13th, Palladium has rallied from $225 to a high of $283 on August 5th, a 25.8% move in 3 weeks. As with equities profit taking is inevitable as momentum slows. We have been anticipating a trend reversal on Palladium for a week now and support at the 7 Day Moving Average (MA7) was given up yesterday and confirmed with a close below MA7. The MACD has turned negative, the RSI is at 62 and falling and the Stochastic have crossed to confirm this bearish sentiment. The FOMC’s decision to keep rates on hold between 0-0.25%, and their comments that interest rates will remain low “for an extended period” were well received by the markets. Equities and commodities rallied, but Palladium could only post a $2 move. This suggests to me that the bulls have had their fun with Palladium and a sell off is imminent. If we get one more close below the MA7at $275.85, short Palladium. Target the 62% Fibonacci retracement of the 3 week rally at $248. Limits should be placed above multi-month highs at $285.
