XPD/XPT ratio is testing the 2-year average, 2.15. In the last 2 years, Palladium has shown a better performance relative to platinum with %80.22 to %33.24. Last 3 months, however, while XPT is increased by %24 XPD stayed just above %1.5.
Bloomberg Pair Trade Spread Sheet, first calculates simple linear regression then simulates trade using residual distributions with plus-minus standard deviations. The method is buying Palladium and selling Platinum with the same value or the opposite. Using this pair trading method, a 5-year profit with a $50.000 balance is nearly $224.190. The pair trade strategy is currently in favor of Palladium.
Note: This is a long term strategy that can change quickly. This is only showing that the odds of a better performance from Palladium is more likely.
There is a bullish trend channel starting in mid-summer. 50 and 100-day moving averages are also supporting the XPT. As long as the price stays over the lower line, 2300, bullish pressures can increase and 2510 resistance may be tested again. Over that level, the road to the upper line will be more open.
As for the negative scenario, below 2300, the 200-day moving average will be the next important support level.
