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  • Palladium switches to recovery mode after hitting a more-than-seven-year low  

  • Price trades within bearish channel; a break above 1,038 is needed

Palladium futures experienced a flash drop to 808.99, violating by a slight margin their 2024 range to hit the lowest point since May 2017 earlier this month. The slide, however, was temporary and the price soon rotated higher again to resume its previous neutral profile above February’s trough of 856.

The 920 region has been a hurdle for the bulls so far this month and a close above it could be a relief for the market, though a bounce out of the four-month-old bearish channel and the 935 territory could be key for an advance towards the 200-day SMA at 985. The trendline zone of 1,015-1,038 could be the next obstacle. Perhaps a victory there could trigger an exciting rally straight to the 1,100 double top area.

The bulls don’t have control of the market according to the technical indicators. The RSI has yet to cross above its 50 neutral mark and the stochastic oscillator is already set for a negative reversal near its 80 overbought level. Moreover, the simple moving averages (SMAs) remain negatively charged, reducing the odds for a bullish trend reversal.

If the 935 zone initiates a new bearish wave, the price could initially seek support near its June-July floor of 865 and then around the lower boundary of the bearish channel seen at 806. Should the broad outlook worsen below the latter, the spotlight will fall on the 2017 trough of 740.

Summing up, palladium futures have started a new positive cycle after touching the bottom of a bearish structure. Still, the commodity might remain unattractive unless it successfully surges above 1,038.