Palladium at major resistance …

Cliff Notes: Palladium converging into to major resistance.  This is important because it’s a nice little commodity to watch w/ regard to the NASDAQ and AAPL. In order to build the pattern we are going to to go step by step this morning  into “why” Friday’s high was important from a PATTERN perspective.

1. First, here’s WEEKLY charts of 1) NASDAQ and Palladium and 2) AAPL and Palladium.

  • notice that when palladium broke out of the consolidating triangle, AAPL took off.
  • of late there has been a lead/lag relationship at times BUT the overall directional pivot is clear.  As Palladium goes, so does NASDAQ and AAPL.

Main20140824102709

2.  When constructing a PATTERN there are three things we do — PROJECT / EXTEND/ RETRACE.  In order to keep this post brief I’ll do the basic stuff …

  • PROJECT: note in the two charts below we have 2 “basic” projections coming into the same area.  That warns of resistance.
Palladium 1.618 Price Projection

Palladium 1.618 Price Projection

 

Main20140824105030

 

  • EXTEND: note, we used the middle point at 593 for the extension pattern.  Also, note 1.68179 nd 1.732 are used.  musical note and the square root of 3 …
extension from 2008 (shaded light blue triangle)

extension from 2008 (shaded light blue triangle)

  • RETRACE: from the all time high we have a .786 retracement.  This is NOT a fibonacci number.  Here’s the math- 1.618/square root is 1.27 and 1/1.27 = .786.

Main20140824105623

so … as you can see, we have a bunch of NUMBERS adding up to this being a big level for Palladium.  And, while a case can be made that, since these are weekly/monthly nodes coming out, it SHOULD be a hefty amount of resistance.  That being said, it could also BLOW RIGHT THRU EM’ and rip higher and higher.  It’s just a pattern folks.

Last – the BUTTERFLY PATTERN is present.  Connect two triangles together and that’s the butterfly pattern …

Butterfly SELL pattern

Butterfly SELL pattern

put it all together and here is the picture:

PATTERNS complete on Palladium ...

PATTERNS complete on Palladium …

here’s a potential count — note – 4 doesn’t CLOSE below 1 so I say “go for it” w/ regard to the count. Additionally, alternate targets provided at little higher.  Sure seems like it wants to head up that way … ?

Palladium Count Potential

Palladium Count Potential

last thing we check is the “relative strength” using ratio analysis. in this case we have PALLADIUM / GOLD.  When we overlay Gold on top of the ration there isn’t that big of a correlation. HOWEVER, when Palladium is overlaid (see below) we can see that this ratio is extremely important.  And, what do we have on the ratio – a SELL PATTERN appearing, which, in the past, has caused Palladium to inflect.  Stay tuned.

note, palladium prices overlaid and how the ratio is nicely synced w/ the highs and lows.

note, palladium prices overlaid and how the ratio is nicely synced w/ the highs and lows.

ratio of XPD / XAU - note pattern completing a little higher

ratio of XPD / XAU – note pattern completing a little higher

 

So, there you have it … watch this important relationship, closely next week.

BART

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