Palladium (XPUSD) has been a focal point of market activity, exhibiting a notable bullish rally in the previous week. Breaking above the EMA 50 marked a significant milestone, adding credence to the strength in bullish momentum.
A noteworthy development is the breach of two trendlines (black color trendlines), a potential indication of increased bullish fervor and a simultaneous weakening of bearish pressure. However, this week's Tuesday session brought about a lower high, striking a key area that had once served as support but had now transformed into a resistance zone within the range of 1094.02-1086.82 (highlighted in the red rectangle).
Technical signals emerged in the form of a dark cloud cover and bearish engulfing patterns near the aforementioned resistance, suggesting a corrective phase. Currently in a correction, Palladium appears poised to form a falling pennant, a pattern indicative of bullish trend continuation. The pole, representing the recent bullish rally, spans from the low of November 13th to the high of November 21st.
Key support is identified at the apex at 1032.59, the intersection of the falling wedge pattern, highlighted in a red circle. A break below this critical support level could lead to a decline towards the lower support, found near the bullish engulfing candlestick at the bottom of the recent swing low.
Analyzing the momentum indicators, the MACD histogram has crossed above the 0 line, and the signal line is in close proximity to a potential crossover. Such a development may signal further appreciation in the price of Palladium.
The Relative Strength Index (RSI) currently stands at 47, with a slight distance from the psychological level at 40. A breach below 40 could trigger panic selling, potentially driving the price lower toward the previously mentioned lower support near the bullish engulfing candlestick.
In conclusion, Palladium (XPUSD) undergoes a correction after a bullish rally, encountering resistance at a crucial level. Traders are advised to monitor key support levels and potential patterns, including the formation of a falling pennant. The evolving dynamics of Palladium's price action provide valuable insights for strategic decision-making in the precious metals market.
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