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XPD/USD statistical and technical analysis

The current price of XPD/USD - Palladium Spot US Dollar is 2 777.5 (April 16, 2021). This commodity is currently heading for the overall highs reached before the outbreak of the COVID-19 pandemic. Price momentum is also high in recent weeks, so let’s now look at statistical and technical analyzes.

Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 1.48% and -1.53% , respectively. The estimated daily return in both directions based on their probability of occurrence is 0.75% and -0.70% . Friday´s return was 1.34% . Our scoring is currently neutral (0 ) for the month-on-month change and 0 for price indexation. Both scorings range from -3 up to 3 . Indexation is currently in the last growth phase of the cycle. Therefore, the scores are zero in both cases. That means that the bulls should wait for a better time before entering the position, or at least be more careful. The estimated cycles development based on our analytical system is shown in the following chart.

XPD/USD estimated cycles development Source: WALFIR

Different moving averages (MAs) help us better identify trends across multiple time frames. We use 3 basic MAs to find out which sentiment dominates each horizon. The purple line represents the monthly , the green line the 6 months and the yellow line the annual moving average. The XPD/USD rebounded dynamically upwards in March. Therefore, as we can see in the chart below, all MAs still support bullish sentiment.

XPD/USD daily price development Source: WALFIR

Over the last month, we have witnessed more growing trends, with the maximum level reaching 6 consecutive days. However, the total maximum in the measured period (last 3 years) is 14 days. The downward trends did not exceed more than 2 days in the same period. The maximum since the outbreak of the COVID-19 pandemic is 5 days. We could use the average annual ATR (Average True Range) obtained from daily data (3.72% ) to estimate Stop Loss orders for our positions. The current value is 2.73% . Approximately 90% confidence interval (return between -3.0% and 3.0% ) is shown in the histogram below by a red rectangle.

XPD/USD daily return distribution Source: WALFIR

We could use the last decile of low to high returns (5.25% ) to estimate Profit Targets, as shown in the chart below.

XPD/USD low to high distribution Source: WALFIR

The basic technical analysis points to positive sentiment, as the price is currently testing the overall highs. The XPD/USD has broken above this year’s high, and if it continues to rise, the psychological level of 3 000 could be strong resistance. However, if the price does not break the maximum and on the contrary starts to fall, the next stop could be the psychological level at 2 500 or the demand zone (green rectangle), where the Fibonacci retracement level of 23.60% is also, along with a long-term moving average. In addition, a divergence between the price development and the RSI created in the last 2 months could support this scenario.

XPD/USD basic technical analysis Source: TradingView

WALFIR Technologies is one of the three divisions of WALFIR s.r.o., which is based in Slovakia. The primary interests of this division are analytical, quantitative, and algorithmic...

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