PALLADIUM TODAY – Challenging top of bull-flag, wage talks remain deadlocked

Short Term: Medium Term: Long Term: Resistances: R1 635.50 April high R2 678 20 DMA R3 691 Top of flag R4 710-719 Former highs R5 724 Oct high R6 747.50 High so far Support: S1 678 20 DMA S2 664 38.2% Fibo S3 651 Recent dip low S4 638 50% Fibo S5 570 June 08 high S6 528 June low S7 452 Low so far Stochastics:Bullish Legend: MACD = Moving average convergence divergence Fibo = Fibonacci retracement line (H)SL = (Horizontal) support line BB = Bollinger band DMA = Daily moving average H&S = Head-and-shoulder formation Technical Comment Analysis Palladium found support just ahead of $650; prices subsequently rebounded. They have climbed back above the 20 DMA and are challenging the top of the flag. The pullback broke the 38.2% Fibo at $664. The low was $651 but it did not reach the 50% Fibo at $638. The stochastics have become volatile. They are bullish for now, which is supportive. We see this consolidation/pullback as a continuation pattern. Macro factors South Africa’s NUM has declared a wage dispute with Amplats – the company has offered wage increases of 6.75 percent but the NUM is seeking 14.5 percent, down from 20 percent. The NUM represents about 20 percent of the company’s workforce. A state mediator will now try to get each party to reach an agreement; if that fails, the union members will have legal grounds to strike. The AMCU is also in a wage dispute with Implats. Amplats is bringing forward the rebuild of its Waterval furnace No1 after a furnace leak. The smelter accounts for a fifth of the company’s refined platinum output. Concentrate will be stockpiled but refined production will suffer because its other smelters are already running at full capacity. This is likely to accelerate the drawdown in stocks. The rebuild is expected to take three-to-four months. The pullback in prices seems to be the result of profit-taking; given the gains since the June low, this is not surprising. The gross long fund position on Nymex climbed to 22,727 contracts on August 9 from a low of 12,824 contracts late in May. It has since started to slip on long liquidation and was last at 18,405 contracts. Shorts, however, have been covering – they bought back 751 contracts in the week ending September 13. At 5,538 contracts, the short position is relatively small.  ETF investor holdings continue to trend lower. Good Chinese auto sales – they climbed 24 percent in August year-on-year – bode well for palladium demand. Conclusion The extent and pace of the June rally suggested the market has discounted some supply disruptions in South Africa. Some longs seem to have got tired of holding their long positions while there was little news of fresh developments, hence some stale long liquidation by funds and redemptions by ETF holders. With state mediators now involved; legal strikes could follow is no compromise can be found.  The upside is favoured. All trades or trading strategies mentioned in the report are hypothetical, for illustration only and do not constitute trading recommendations.

The post PALLADIUM TODAY – Challenging top of bull-flag, wage talks remain deadlocked appeared first on The Bullion Desk.

from The Bullion Desk http://ift.tt/2d3ZKQh
via IFTTT