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Palladium, its Correlation with Gold, How to Profit From it

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In this post, we’ll show an application of the correlation between Palladium (PA) and Gold (GC). Using it and divergence to assess the next move of GG, based on how PA moves.

A leading indicator?

In the following chart, we observe the comparison between Palladium and Gold. We can note that both metals tend to move in the same direction, it means if PA soars, GC will follow the same path, and vice-versa.



What’s next?

The  4-hour chart of the Palladium (PA) shows a drop and development of a potential flag pattern. This structure is a continuation pattern that implies new lows. In consequence, we should expect more drops also for Gold, as it is correlated to PA.

 

Finally, in the GC -hour chart, we observe two signals we should pay attention to. The first one is the divergence against the Palladium chart. While Palladium decreases, Gold moves upward. The last one is the volume in the current potential flag pattern. We observe a lower volume compared with the July 25 session. This makes us suspect that the structure is a corrective formation and is likely that this movement reverses soon.




In conclusion, for the golden metal, we foresee a decline from the current area against the top as invalidation level. Our potential profit targets are at $1,402.3 and $1,384.9.

Remember that the price is not forced to move as our outlook proposes. The chart released corresponds to an educational application of correlations. Comments issued don’t represent an investment recommendation. Leveraged products are complex financial instruments and are not recommended for a certain type of traders. Losses can exceed deposits.

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