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Palladium Technical Analysis - Palladium Trading: 2019-11-11
In Asian countries car sales are declining worldwide
According to Japanese Automobile Manufacturers Association (JAMА), the manufacture of cars in Japan in august 2019 was decreased by 2.2 % if compared to a year ago. Will the palladium quotations fall?
80 % of the world’s consummation of palladium is accounted for by the automotive industry and the production of catalysts to reduce harmful gasoline engine emissions. Another 5% is consumed by the global chemical industry. As environmental standards tightened, the demand for autocatalysts increased and the price of palladium soared 3 times in the last 3 years. Now it has reached the psychological level of $ 1600 / ounce for the 2nd time. Meanwhile, according to the estimates of the Association of European Businesses, the Association of European Automobile Manufacturers and a number of consulting agencies, sales of automobiles in the world decreased by 7.4% in 1Q2019 compared to the same period of 2018. The data for the first half of the year may turn out to be even worse, since according to official data, the decline in car sales in China in January-May 2019 was 15.2%. Note that after 3-fold growth of palladium quotations, its consumption has decreased in the jewelry and electronics industry, in dental prosthetic and in the issue of investment coins and bars. Theoretically, it is possible to increase the dependence of quotations on the state of affairs in the global automotive industry and the chemical industry.
On the daily timeframe, XPDUSD: D1 breached down the support line of the uptrend. The price decrease is possible in case of a decline in global demand of gasoline cars and, thus, the demand of autocatalysts from palladium.
- The Parabolic indicator demonstrates a signal to decrease.
- The Bolinger bands narrowed, indicating a volatility decrease. The upper band is titled downward
- The RSI indicato is above 50. It has formed a negative divergence.
- The MACD indicator дgives a bearish signal.
The bearish momentum may develop in case XPDUSDfalls below the two last fractal lows: 1730. This level may serve as an entry point. The initial stop loss may be placed above the last fractal high, the historic high, the upper Bollinger band and the Parabolic signal at 1850. After opening the pending order, the stop shall be moved following the Bollinger and Parabolic signals to the next fractal maximum. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place a stop loss moving it in the direction of the trade. If the price meets the stop level (1850) without reaching the order (1730), we recommend to cancel the order: the market sustains internal changes that were not taken into account.
Technical Analysis Summary
| Position | Sell |
| Sell stop | below 1730 |
| Stop loss | above 1850 |
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