Palladium Strikes Fresh All-time Highs Despite FMI's Growth Outlook

The IMF said Tuesday that the trade war would reduce global growth to its lowest level since the 2008 financial crisis. The international body added that the projections could worsen if the conflict remains unresolved.

The organization, in its latest publication of global economic outlook, lowered the projection of GDP growth from 2019 to 3.0%, below the 3.2% forecasted in July.

In the published report, the International Monetary Fund explains the impacts of the trade war in the global economy. The IMF mentions effects on direct costs, raising uncertainty in markets, reduced investment, low productivity, among other factors.

In this context of global deceleration in growth and consumption, we highlight the increase in the price of palladium. On Tuesday, The metal that is used in the automotive sector to reduce emissions reached a new all-time high. The palladium price touched $ 1,741.67 per ounce. During this year, the price of this metal increased over 40% (YTD).

 

Technical Overview

Palladium, in its big-picture, represents a five-waves sequence which could be topping. The long-term channel (dashed line) shows the strong bullish bias of this market.

In the daily timeframe, we observe the metal moving in an active bullish cycle. Palladium could be developing a wave (3) in a blue degree, which at the same time could be running in a wave 5 labeled in black.

The bullish trend will remain sound while the metal remains above $1,432 per ounce. In the long-term, Palladium could retrace to the $1,450 zone before bouncing off and visit a new all-time high.

The next chart corresponds to the metal in its 8-hour timeframe. The figure illustrates that the bullish trend is intact. The current fifth wave could end near the $1,750 level.

In the near-term, we think a decline to the $1,685 level is likely, with a potential bearish extension until the zone of $1,650 per ounce.

From the latest Commitment of Traders report, institutional traders reported an increase of 5.01% of long positions. This advance represents 82.41% of bullish positioning on the speculative side. On the seller-side, institutional traders informed on the CFTC report a marginal reduction of 0.81% in its shorts.

The weekly variation allowed us to detect a bullish pressure for Palladium. However, we have to consider that big traders hold 82.41% of longs, and the 13- weeks average is 79.05%. This difference makes us assume a profit-taking activity. In consequence, our preferred position is neutral for this market.

 

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