PALLADIUM

Negative divergence on Palladium chart is a red flag. Divergences are first warning signals of a possible trend reversal. However they should be confirmed by price action – a decisive breakdown. There are few negative signs on this long-term (monthly scale) chart.

1) Price breached its previous high but failed to hold above that level (865).

2) Top in 2011 and the new high in 2014 are not confirmed by the momentum indicator (RSI (14)).

3) Uptrend that started from the low in 2012 has been very weak and choppy.

In the coming months, a breakdown below 700 levels can send Palladium towards 500.

I welcome any thoughts on the possible supply/demand that resulted in such price action or could impact the price in the coming months.