Why Did Palladium Fall 18% After Its Rally?

TL;DR

Palladium fell sharply because its rally encountered heavy resistance, producing a roughly 15% drawdown, a rapid rebound toward the high, and then a deeper decline. The weekly structure had not yet confirmed the end of the bull market because price remained above the prior local high and its bull market support band. Read on to understand the key support test, likely consolidation, and comparison with gold’s earlier correction.

Transcript

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Key Insights

• Palladium remains above its weekly bull market support band despite an aggressive decline of about 15% in a day. The pullback is therefore substantial, particularly for heavily allocated investors, but it has not yet broken the broader technical support structure discussed in the analysis.
• Prior resistance levels are important because they should generally become support during a continuing bull market. If palladium decisively loses a previous breakout level, the integrity of the recent advance would become more questionable, much as broken support changed the interpretation of an earlier Bitcoin move.
• Palladium’s short-term pattern consists of a deep decline, a rapid recovery toward the high, and a second, deeper decline. That sequence suggests the market encountered heavy resistance and may need an extended consolidation period before it can make another durable attempt to advance.
• The current palladium bull market began in 2024 after price consolidated near its lows from November 2023 until May 2025. That roughly year-and-a-half base makes the structure different from the shorter low formed between December 2004 and September 2005.
• Gold previously displayed a similar four-hour pattern after a parabolic rally, with an impulsive drop, a rebound just below the high, and a deeper decline. Gold later found a low and moved higher, although it required about two months to break through the resistance area.
• Silver broke through its prior 2011 all-time high before pulling back around October 17 and October 20. That correction coincided with gold’s comparable reversal pattern, creating a precedent for one metal reaching a major milestone while another metal experiences a sharp correction.
• Platinum recently broke through its prior all-time high and then corrected back below it. Palladium’s simultaneous reversal resembles the earlier relationship between silver and gold, although the analysis presents this as a possible recurring market relationship rather than a guaranteed causal mechanism.
• Metals can experience altcoin-like volatility when their rallies become unusually aggressive. Large upside moves can therefore be accompanied by severe drawdowns, and an extended distance above the 20-week moving average may require consolidation without necessarily indicating that the entire bull market has ended.

Questions & Answers

Q: Why did palladium fall sharply after its recent rally?

The rally appears to have encountered heavy resistance. Palladium suffered a drawdown of roughly 15%, rebounded rapidly toward its high, and then dropped even further, a sequence suggesting that price may need a longer consolidation before another advance.

Q: Does palladium’s decline mean its bull market is over?

The decline alone does not confirm that the bull market has ended. Palladium remained above the previous local high on the weekly time frame and had not broken its broader bull market support band, although losing prior resistance levels as support would call the recent move into question.

Q: What palladium support level is important now?

The analysis emphasizes the last local high that palladium previously broke above. Price wicked beneath it but remained above it on the weekly time frame, and a decisive loss of that former resistance level would weaken the structure of the recent advance.

Q: Why might palladium require a longer consolidation?

Palladium experienced a deep drop, returned quickly toward its high, and then declined more deeply. That failed recovery suggests substantial resistance near the high and supports the view that price may need more time to consolidate.

Q: How does palladium’s correction compare with gold’s earlier pattern?

Gold previously formed a high, dropped sharply, rebounded toward the high, and then fell to a deeper low. The speaker identifies that sequence as similar to palladium’s current short-term structure and notes that gold’s example occurred only a couple of months earlier.

Q: What does palladium’s long bottoming period suggest?

Palladium consolidated near its lows from November 2023 until May 2025, or about a year and a half, before breaking out. That base was longer than the low from December 2004 to September 2005, which is one reason the speaker does not view the structures as the same.

Q: When did the current palladium bull market begin?

The speaker says the current palladium bull market began in 2024. Whether it develops into a larger cycle like those from 1977 to 1980, 1996 to 2001, or 2008 to 2011 remains uncertain.

Q: How should palladium’s extreme short-term volatility be interpreted?

Metals had recently begun moving more aggressively than they normally do, making short-term charts more relevant to the analysis. A roughly 15% drawdown is substantial, but the broader interpretation still depends on whether former resistance holds as support and whether the bull market support band remains intact.

Summary & Key Takeaways

• Palladium formed a long bottoming structure, broke out, tested its bull market support band, and advanced before suffering a sharp reversal. Although the price briefly moved below a previous local high, it remained above that level on the weekly time frame and had not yet reached the broader bull market support band.

• The short-term structure resembles gold’s earlier pattern: a major rally reached a high, an impulsive decline followed, price returned near the high, and a deeper decline occurred afterward. Gold eventually recovered and advanced, but only after spending roughly two months consolidating beneath the resistance that had rejected its first attempts.

• The comparison extends across metals because gold’s earlier reversal coincided with silver breaking its 2011 high and pulling back. Palladium’s current reversal similarly occurred as platinum moved above its prior all-time high and then corrected below it, suggesting that milestones in one major asset can accompany pullbacks elsewhere in its asset class.