I’m talking about Palladium…
The main reason why Palladium is flying and will continue to do so, is all thanks to regulations taking place in China.
We are seeing major industrial demand driven by the expectations that there'll be stricter environmental regulations and standards in China.
In fact, they expect production to trail by 1.9 million ounces of palladium this year. That’s an insane 800,000 ounces more than last year.
For you to understand why there is an increase in demand for palladium, we need to look at what the main industrial use for this precious metal is.
Did you know, two-thirds, or 67%, of all palladium is consumed each and every year from the manufacturing of automobile catalytic converters.
What’s important to note is that the palladium - used in the catalytic converter - helps control the harmful emissions and pollution from fuel-powered vehicle car exhausts…
And now, with Chinese and European vehicles needing to meet the (China 6 and Euro 6d) legislation we can expect a rise in the global average loadings on gasoline-catalysts.
This increase in demand, will send the palladium price even higher.
Vivek Dhar, an analyst at Commonwealth Bank of Australia summed it up nicely:
"Demand is being driven by environmental regulations, particularly in China, which has increased palladium use in vehicles and should offset any recent weakness in car sales"
Right, so we know the big reason why Palladium should continue rallying, but wait until you see this chart…
This half-crescent pattern will take Palladium to the moon
Looking at the above daily Palladium chart, you can see it’s been moving in a strong uptrend from a low price of $1,460 up to the previous high at $2,530.
During this time, it has formed a strong upward (buying) momentum pattern which I call the “Half Crescent” formation (shaded grey).
This is when the price moves up at a steep and round angle, which creates a formation that looks like the crescent shape similar to the moon.
And now that the price has broken out and above the six-month ceiling level (pink line), tells me that palladium is going to continue to sky rocket.
To calculate the next target of Palladium we'll basically use my breakout High-Low calculation…
This is a target calculation where I take the price difference between the most recent high ($2,530) and the most recent low ($1,460 and I add it to the most recent high price.
Price Target =
= (High - Low) + High
= ($2,530 - $1,460) + $2,530
This means, we will be able to take full advantage of the palladium price rise while it rallies another $1.070…