Palladium Looks Done (trendlines, MAs, and Fib)

First is simple support and resistance. The black line is currently acting as resistance and there was a clear rejection from our that trendline. This trendline over 20 years old, it is not to be taken lightly. The purple trendline is a mere three years old but intersects the price action at the same wick.

There are also the orange support lines and I am looking for each of them to turn from support to resistance. If that should happen it would be a clear indication to go short. Much like the green circle, we could see price action struggle there for some time so tunneling down for some lower time frame structure and divergences would be a good idea. You want to think several moves ahead but only put your order one one or two steps ahead so your money isn't too tied up.

This move was extraordinarily impulsive and this over-performance should lead to extended under performance. Expect the 20M SMA to offer almost no protection/support when this thing gets moving and so far the 50M looks like a pace we will consolidate before moving lower.

After this move I would expect a massive amount of giveback. Palladium has given back over 78% of a move before and I would not be surprised to see it do the same again.

The interesting thing is in the last two recessions Palladium continued upward and had a blow off top while the S&P was already in decline. So, either this time is different and people are taking their profits early, or we might have one final up leg. Now, we have a short trading week and a couple of days to end off the year so I don't see much happening to reverse the monthly candle on Palladium is going to improve much.

Finally, I am not looking to trade this. I am doing this post because I am looking at the "Everything Bubble" versus the "Almost Everything Bubble" debate. Lots of people are looking for precious metals to be a store of value in potential hard economic times and the charts are showing a serious potential that precious metals are in a bubble that hasn't corrected yet. I have made the case in other posts that I think Gold is about to perform is C Elliot Wave, Silver is half way through the A wave, and bitcoin is part way through the C wave. Palladium looks like it is done with wave 5 and about to start its ABC, which is why I am looking for support lines to become resistance.

We are in a set of circumstances where precious metals have schizophrenic divergences between the charts and traders expectations. Look at silver. People are calling for all time highs, and I certainly see the case for it, but it certainly looks like we are in a fractal were we head lower, not higher. And this is on silver, which so many people are expecting to outperform gold based on a higher beta and the gold/silver ratio being an all time high favor of gold. The chart below looks like silver is going to drop to hell.

Look at Silver/Palladium. It looks like silver is going to gore palladium like a bull at this point, but the silver chart itself has some serious bearish problems. Silver looks like if you want to hold your metals while they drop in value it is the metal do to it in.

Comment:

I had to recreate my chart but if you hit play you can see the trend lines I was looking for to flip from support to resistance are still acting as support. So the technical entry for a short isn't there yet. But I think it is clear that palladium has had its blow off top and will be going through a bubble pop. Since palladium over performed into the everything bubble I expect it to over perform to the downside as well. But the most technical entry is still a bit further away.