Palladium Sellers Aim to Initiate Fresh Downtrend as Market Dynamics Shift

Monday Market Overview:

On Monday, palladium prices retreated to the $1,000 per ounce level, signaling a potential halt to the one-month bullish trend. The broader market trend has shown a significant decline in palladium prices since reaching their peak in March 2022. This downward trajectory is largely driven by macroeconomic factors, particularly the anticipated surplus in supply due to declining industrial demand for automotive production. The increasing adoption of electric vehicles (EVs) is expected to substantially reduce long-term demand for palladium, which is primarily used in catalytic converters for internal combustion engine vehicles. Stable supply forecasts have also contributed to price declines, leading palladium to fall below platinum for the first time since 2018.

Technical Analysis:

On the four-hour chart, the uptrend appears to be losing steam as it forms a lower high at 1039.39. Sellers are challenging the critical support at 1001.97, positioning the price on the brink of a potential new downtrend. If this support is breached, the price is likely to continue its descent towards 991.79 and the 100-period moving average around 978.84. Should these levels fail to halt the decline, the next target for sellers would be 964.55.

Alternative Scenario:

If buyers defend the 1001.97 support level, the price may enter a sideways range, facing resistance at the 34-period moving average near 1016.26 and the recent high of 1039.39. A break above this high is essential for resuming the bullish trend.

Key Levels

Resistance Levels:

• Resistance 3: 1039.39
• Resistance 2: 1016.26
• Resistance 1: 1001.97

Current Price (at the time of analysis): 1001.09

Support Levels:

• Support 1: 991.79
• Support 2: 978.84
• Support 3: 964.55

Impactful Events:

In a relatively quiet economic calendar, the US dollar remains under pressure from mixed non-farm payroll data and rising unemployment rates. This could delay increased seller activity in the precious metals market.

Oscillators and Risk Warnings:

RSI (Relative Strength Index): Neutral, indicating balanced market conditions.

MACD (Moving Average Convergence Divergence): Neutral, suggesting no strong momentum.

Moving Averages: Mixed, reflecting the current uncertainty in price direction.

Conclusion:

Palladium is at a critical juncture, with sellers aiming to initiate a fresh downtrend following a breach of key support levels. A break below 1001.97 could lead to further declines towards 991.79, 978.84, and potentially 964.55. However, if buyers manage to defend the 1001.97 support, the price could enter a sideways range, with resistance at 1016.26 and 1039.39. The broader market dynamics, including declining industrial demand and stable supply forecasts, continue to exert downward pressure on palladium prices.

Investors should monitor the market’s reaction to economic data and the ongoing developments in the automotive industry, particularly the shift towards electric vehicles, which will significantly impact palladium demand in the long term.