Palladium prices moved above $1,000 yesterday for the second time this year, but still ended up finishing the day sharply lower, posting a key day reversal.
That should act as a warning for investors and traders alike as this sort of price action can usually be indicative of a market top.
Certainly the move to levels last seen in 2001 was worthy of a headline or two, and whenever the headlines scream that this metal rally has further to go, there is always the element of after the fact.
The commodity’s inability to hold onto the gains above $1,000 would suggest that while the long term direction remains positive, in the short term we could see sharp move lower, simply down to some nervousness about long positions.
To put it into context, the Palladium price is already nearly 50% up on the year, and up 80% since the beginning of 2016. If we fail to gain a foothold above $1,000 we could fall back quite sharply.
Fundamentals maybe driving the price higher, but the technical outlook suggest the possibility of a bull trap, how it behaves over the next few days is likely to hold the key.
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