Car sales are declining worldwide
Palladium quotations again approached the historical maximum. Meanwhile, the car sales worldwide is decreasing. Is XPDUSD correction possible?
Approximately 80% of global palladium consumption is accounted for by the automotive industry and the production of catalysts to reduce harmful gasoline engine emissions. Another 5% is consumed by the global chemical industry. As environmental standards tightened, the demand for autocatalysts increased and the price of palladium soared 3 times in the last 3 years. Now it has reached the psychological level of $ 1600 / ounce for the 2nd time. Meanwhile, according to the estimates of the Association of European Businesses, the Association of European Automobile Manufacturers and a number of consulting agencies, sales of automobiles in the world decreased by 7.4% in 1Q2019 compared to the same period of 2018. The data for the first half of the year may turn out to be even worse, since according to official data, the decline in car sales in China in January-May 2019 was 15.2%. Note that after 3-fold growth of palladium quotations, its consumption has decreased in the jewelry and electronics industry, in dental prosthetic and in the issue of investment coins and bars. Theoretically, it is possible to increase the dependence of quotations on the state of affairs in the global automotive industry and the chemical industry.
On the daily timeframe XPDUSD: D1 adjusted down from the historical maximum. It overcame the growing trend support line. Decrease in quotations is possible in the event of a decrease in global demand and a continuation of the decline in the Chinese automotive industry.
- The Parabolic indicator indicates signal to decrease.
- TheBolinger bands widened, indicating high volatility. The top line slopes down.
- The RSI indicator is above the 50 mark. It has formed a divergence to decrease.
- The MACD indicator gives bearish signal.
The bearish momentum may develop if XPDUSD will drop below its last high: 1520. This level can be used as an entry point. The initial stop lose may be placed higher than the last upper fractal, the historical maximum and the Parabolic signal: 1620. After opening the pending order, stop shall be moved following the the Bollinger and Parabolic signals to the next fractal minimum. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place a stop loss moving it in the direction of the trade. If the price meets the stop level (1520) without reaching the order (1620), we recommend to cancel the order: the market sustains internal changes that were not taken into account.
Technical Analysis Summary
PositionSell Sell stop Below 1520 Stop loss Above 1620
Market Overview
SP500, Dow notch third consecutive record closes Dollar strengthening resumed as Empire State index rebounded
US stock market inched to third record closing on Monday as Citigroup (NYSE:C) results mark start of earnings season. The S&P 500 added less than 0.1% to 3014.30. Dow Jones industrial gained 0.1% to 27359.16. The Nasdaq composite rose 0.2% to 8258.19. The dollar resumed strengthening as data showed the New York Fed’s Empire State manufacturing index rebounded to 4.3 in July, from minus 8.6 in June : the live dollar index data show the ICE (NYSE:ICE) US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, added 0.1% to 96.916 and is higher currently. Stock index futures point to mixed market openings today
DAX 30 paces European indexes recovery
European stocks resumed advancing on Monday with China’s growth slowdown concerns limiting gains. Both GBP/USD and EUR/USD turned lower and are down currently. The Stoxx Europe 600 index gained 0.5% led by auto maker shares. The DAX 30 rose 0.5% to 12387.34. France’s CAC 40 edged up 0.1% and UK’s FTSE 100 added 0.3% to 7531.72.
Nikkei leads Asian indexes losses
Asian stock indices are mostly falling today. Nikkei closed 0.7% lower at 21535.25 despite accelerated yen slide against the dollar. Markets in China are mixed: the Shanghai Composite Index is down 0.2% while Hong Kong’s Hang Seng Index is 0.1% higher. Australia’s All Ordinaries Index lost 0.2% despite Australian dollar’s slide against the greenback.
Brent advances
Brent futures prices are edging higher. Prices fell yesterday as Gulf storm threat passes: September Brent crude lost 0.4% to $66.48 a barrel on Monday.