Trade of the week: long June Palladium futures
Explore a strategic long position on palladium June futures as the precious metal finds support at critical technical levels despite ongoing market uncertainty.
Current trade overview: long position
In the current market environment, a trading opportunity has been identified in palladium futures, which appears more stable than other precious metals during recent volatility. The strategy involves taking a long position based on recent market movements and potential bottoming patterns.
Trade setup
- Entry point: long palladium June futures at 929, capitalising on a break above last week's highs
- Stop loss: set at 871, positioned below the recent Sunday trading low. This stop loss placement is crucial to limit potential losses if the market moves against the position
- Target: aim for an upside target around the 1000 level, representing a significant psychological resistance point
Risk-reward ratio
This trade offers a favourable risk-reward ratio, with approximately 71 points of risk for a potential 71-point gain. However, it is important to note that this trade comes amid heightened market uncertainty, and traders should size their positions accordingly.
Market context
Palladium has recently fallen to test previous support levels dating back to September of the previous year. While briefly breaking below these levels on Tuesday, the market has largely maintained support, suggesting this area may hold in the short term. Today's break above last week's highs provides additional technical confirmation of a potential bottoming pattern.
The low made during Sunday trading (which should be treated with caution due to lower liquidity) coincides with the June low from last year, providing another layer of technical support.
Cautionary note: while this trade presents a structured opportunity based on technical analysis, broader market conditions remain volatile due to uncertainty surrounding President Trump's tariff policies. Traders are advised to consider their risk tolerance and market outlook before engaging in this trade.
The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.
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