SINGAPORE: Spot palladium may temporarily peak around a major resistance at $1,668 per ounce, and then start a deep correction in the second quarter.
The resistance is identified as the 161.8 percent projection level of an upward wave C from the January 2016 low of $449.55. This is the third wave of a presumed three-wave cycle from the December 2008 low of $157.
The preceding projection levels worked well as resistances, such as the 50 percent level at $826, the 61.8 percent level at $915 and the 86.4 percent level at $1,100. There is a good reason to believe that the 161.8 percent level at $1,668 could trigger a decent correction.
Indeed, the linear rise from the August 2018 low of $832 looks so steep that it is prone to a sudden collapse. Working together with the resistance at $1,668 is another one at $1,683, the 123.6 percent projection level of an upward wave c from $832.
These two resistances are expected to form a strong resistance zone to trigger a deep correction which has been absent ever since the start of the wave c.
On the daily chart, the bearish divergence strongly indicates an exhaustion of the wave c. A rising trendline passing through the peaks of the wave 1 and the wave 3 points at a possible peak of the wave 5 around $1,683. A completion of the wave 5 will mark the end of the wave c as well.
A break above $1,683, which is least likely, may trigger a gain into the range of $1,783-$1,946.
* Charts are not available in reports received in email box through "Alert". To get charts, use the news code of TECH/C to retrieve the original reports.
** Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own.
No information in this analysis should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses.
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