“The bulls must be careful, because a reversal to the downside is likely to occur. A reversal, which could be the beginning of a larger move to the south with the potential to lead prices below $730.” That is what we wrote about palladium on March 9th in “Fibonacci To Force Palladium Down”. Our bearishness was based on Elliott Wave anaysis. It suggested we should prepare for the resumption of the downtrend, because there was a complete 5-3 wave cycle on the daily chart of palladium, shown below.
As it turned out, palladium was weaker than we thought, because prices did not even reach the 61.8% Fibonacci level. Instead, the precious metal proceeded straight to the anticipated sell-off . On March 30th, palladium prices fell to $723, thus fulfilling the expectations of taking out the $730 mark.
It looks like we are in wave (3/C) to the south. This means the downtrend remains in progress and we could witness even lower levels from now on. This situation shows the Wave Principle’s ability to warn us early enough about a probable change in the direction of the trend. Every market participant knows how crucial this is, once for preserving one’s fortune, and second, for allowing him to earn more.
