N. American Palladium(PAL) A Possible Rebound Play

Posted by barkand on May 24, 2011 under Bollinger bands, Candlestick charts, Commodities | Be the First to Comment

The share price of North American Palladium (PAL) has been cut in half in a short time. Most of the damage has come this month. It started May near $6.50 but has been living near $3.50 recently. Yesterday, it rose to close at $3.68.

We think the conditions are good for PAL to bounce back and reclaim at some of the ground lost this month. Here’s why:

• It is possible that prices have made a bottom within the Bollinger bands after skidding along the lower band. Downward momentum has slowed. But has it reversed?  Yesterday’s “piercing pattern” gives us some optimism, although we would have preferred to see more volume.
• Many people buy PAL as a proxy for palladium.  And palladium prices have moved sideways for the last two weeks while the share price of PAL has continued falling.

We would be a cautious buyer here. A more low-risk approach would be to wait for a break above $3.80.