The price of Palladium is in a record high zone. This Thursday, the metal has been traded near the $ 1,685.
This metal is mainly used in catalytic converters. Despite the reduction in global demand for cars, the demand for Palladium is increasing. Global emissions standards are increasingly stringent, and auto parts manufacturers require more Palladium.
Currently, the problem lies in the origin of the metal, which comes mainly from South Africa and Russia. Analysts close to the sector do not expect producers to increase production.
However, the possibility of a new rally that can take Palladium to new all-time highs seems to be fading. Fears of a possible global recession and growing commercial tensions seem to provide a scenario of bullish exhaustion for metal.
Technical overview
Palladium price in its weekly timeframe shows a clear bullish trend. The chart exhibits the rally of the fifth wave in progress. Price action is likely developing an Elliott Wave ending diagonal pattern. In this context, we expect a new record high for this metal.
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From the 4-hour chart, Palladium is running in a fourth wave labeled in blue. The current Elliott Wave structure could correspond to a triangle. For the coming weeks, the metal could see a limited decline to the $1,660 zone before to continue the bullish path. If the price drives to the metal to this area, Palladium could find new buyers expecting to activate their long positions.
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The metal could see a new all-time high to the area of $1,740 per ounce. The invalidation zone for this bullish scenario is at $1,500 level.
The palladium futures from the latest CFTC report showed a marginal increase in long positions by 0.76% and a reduction in the shorts by 1.68%.
Institutional traders reported a hold of over 81% of long positions for a fifth consecutive week. The last reading reached 81.53% and is above the 13-weeks average at 78.69%.
In conclusion, the bullish bias remains over the reversion scenario. If the price does not make a new lower high and a fresh lower low, the main trend will on the bullish side.
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