Palladium futures are staging an extraordinary rally over the past three weeks and technically, there is no convincing signal at the moment that the uptrend could soon hit a strong turning point.
Even though the RSI and the Stochastics have bounced back into the overbought territory, increasing the odds for a downside correction, the MACD has yet to show signs of reversing at a time when the price is still trading comfortably above the Ichimoku cloud and its simple moving averages (SMA), which are all sloping upwards.
Nevertheless, traders could consider the 2,583 area as a potential nearby resistance as this is where the 423.6% Fibonacci extension of the short downfall from 1,972 to 1,783 is placed. Further up, all eyes will shift to the 3,000 psychological mark.
In case selling pressure returns, this should happen below 2,300 for the 261.8% Fibonacci support area of 2,200 to come into view. Running lower, the 2,100-2,042 area, which encapsulates the 20-day SMA, will come next in defense. Yet only a breach of the previous peak of 1,972 could put the bullish outlook into question.
Summarizing, palladium futures are viewed as strongly positive with the next target seen near 2,583. Still, any downside correction would not be surprising as the market keeps fluctuating in overbought waters.
