Palladium entered consolidation on Friday (Line 29 Matrix). Consolidation formed after a modest decline and volume spike. The large volume spike knocked price and volume out of alignment. While bulls need to exercise caution whenever the composite trend falls out of triple alignment, they must study the distribution/(flow) leverage during consolidation. The distribution of leverage defines accumulation or distribution as trend 'builds cause' for the next move. Accumulation as price enters sideways chop or declines is bullish, while distribution is bearish. Palladium current consolidation is being accompanied by accumulation, a steady rise in DI from a bearish setup (DI readings below -60%). See Matrix for current reading. Mini DI surges that define accumulation often setup continuation of rallies once the trend resets and realigns.
It never hurts to take profits during consolidation. Experience traders, however, should never short consolidation. Palladium is simply too far from double or triple downside alignment to short. It's also highly unwise to short consolidation accompanied by accumulation in the futures and options markets.
Palladium (PALL)
