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Wednesday, 27 April 2011

Palladium - Nice Long Setup

I was reviewing the precious metals longer term charts last weekend to see whether I could identify a top coming after this amazing move up on silver. I have nothing usable on silver as it is in uncharted territory on my ten year chart, but the gold and palladium charts both look as though they have more upside coming, with palladium being the more interesting of the two.

On the monthly chart the obvious target for palladium is in the 900 - 950 area, depending when it is reached as the resistance trendline is rising. There's some significant resistance in the 857-9 area near the last high as there have been two previous monthly peaks in the same area:
The short term setup looks very encouraging on the 60min chart. Palladium has made a decent low with positive RSI divergence, and the most recent declining resistance trendline has been broken and retested as support, but more importantly a small IHS is forming with the next neckline touch in the 776 area. If it plays out the IHS target is in the 838 area which would suggest at least a retest of the 857-9 resistance level. On the bigger picture that IHS is the right shoulder on a much larger IHS that would indicate to the 948 area, which fits well with the target range on my monthly chart:
I think Palladium may well now be starting a big move to the 900 level and above. I went long at an average price of 752 yesterday and this morning, and I'll exit if it drops below rising support at 736.

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