Trade Recommendation: Palladium
The Palladium/US Dollar pair (XPD/USD) started its uptrend in August 2010 when it took out resistance of 500. The breakout was able to generate enough momentum to sustain a bull run that sent the market to as high as 911.719 in September 2014. In four years, the value of palladium rose by over 82%.
At this point, the precious metal was flashing overbought signals. Those who followed the trend took the opportunity to lock in their gains. XPD/USD dropped to 729.658 in October 2014. While bottom pickers bought the dip, the commodity could only bounce to as high as 833.266 in March 2015.
The lower high snuffed out the market’s bullish steam. It then generated consecutive lower highs and lower lows until it found the bottom at 452.557 in January 2016. The market has been rallying since. In fact, it has resumed its uptrend.
Technical analysis reveal that the Palladium/US Dollar pair has taken out resistance of 900 and triggered the large rounding bottom reversal pattern on the weekly chart. It even went as high as 1,139.450 in January 2018 before it began to correct. It recently dipped to 900 support. In addition, RSI on the weekly chart appears to have sharply risen. This is an indication that the market’s bull run is back on track.
The strategy is to buy XPD/USD as close to 900 support as possible. Bulls are likely to defend this level and use it to climb to our target of 1,300. The process may take less than six months.
Weekly Chart of XPD/USD on OANDA
As of this writing, the XPD/USD pair is trading at 989.87 on OANDA.
Summary of Strategy
Buy: As close to 900 as possible.
Target: 1300
Stop: 840
Featured image courtesy of Shutterstock
