- Summary:
- The rising wedge on the daily chart indicates the potential for Palladium prices to fall to $1825 in the near term.
Palladium price action is taking a dip this Wednesday, dropping by 0.86% as the bears reassert control of the market. Weak Chinese data at the start of the week provided the fundamental trigger for the rejection of the price action just above the 2277 price resistance, spurring a two-day slide that saw Palladium prices fall more than 6%. There was a slight recovery on Tuesday after the People’s Bank of China reacted by lowering interest rates. However, the slide resumed on Wednesday as the global economic outlook worsened.
Commodities and commodity-linked currencies have been hit by the recent risk-off sentiment, just as China started to emerge from its strict lockdown schedule that crippled demand for industrial metals.
However, a recent output downgrade by Sibanye-Stillwater for its palladium mines after severe flooding in its Montana-based operations may provide short-term relief for Palladium prices. The Stillwater mines projected output now stands at 445,000 – 460,000 ounces in 2022 after flooding, and rising operational costs are expected to cause a loss of production from the earlier forecast figure of 550,000 – 580,000 ounces.
Palladium Price Forecast
As predicted in my last analysis piece for the XPD/USD pair, Palladium’s daily chart reveals a rising wedge that has bearish connotations for this asset. The active daily candle is now testing the intersection point between the pattern’s lower border and the 2146 support (30 March, 26 April, and 15 August lows). A breakdown of this double support completes the wedge pattern and points toward the 1825 support level (15 June and 15 July lows) as the completion point of the breakdown move. This move would require the bears to degrade the 8 July and 3 August 2022 lows at 1995.
On the flip side, a bounce on 2146, which challenges and overcomes the 2277 resistance (7 April and 3 May highs), invalidates the bearish outlook. This would give the bulls clear skies to target the 2424 resistance (22 February and 13 April highs), but not before overcoming the 1 April high at 2336. A break of this level brings 2596 into the mix before the 11 March low at 2719 becomes available as an additional upside target.
Palladium: Daily Chart
