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Metals

Is Silver Heading to April Highs of $18.70?

Posted 06/01/2017 2:54PM CT | Eli Tesfaye

July silver is trading $17.280, down about 12 cents on the day. Last week, we looked at the long term silver chart to get a long term perspective. If the lows of today hold, we could see a resumption in price from this level per the chart below. The long term support remains around $15.00. So long as the market manages to hold off this support on the long term basis and hold above today’s low, an April high in the $18.60 range could be tested in the coming days and months.

Equities continue on their parabolic rise as Nasdaq contract enters its eighth months in a row. Based on historical look backs, equities will probably pull back this month. If so, it will likely fuel the metals. Silver will almost surely benefit from that. The economic data points to a possible June rate hike in the US. One other thing to note, the commitment of traders with options report (COT) indicates that the non-commercial and non-reportable positions have increased their holding from a combined 58,631 on May 16 to 64,382 on the May 23 reading. As clearly stated, these traders are moving back to silver. Keep in mind, back in the April 18 reading the same group held 118,943 contracts.

In previous articles, I discussed the possibility of a near-term low off the $16.00 lows. My view today is that weakness has provided market holds today low, momentum price action probably favors the upside. From a technical perspective, nothing changes in that I am getting less and less bearish as prices continue to decline into weekly support lines. Frankly, $16.00 had better hold or else more price pressure to the downside will happen as the result of discouraged bulls abandoning the market. However, any sustained close above lows at $17.00 will probably start a momentum run to the upside. It will set up a higher low against the December 2016 low, signaling near-term lows. 

 

Jul ’17 Silver Daily Chart

Jul '17 Silver Daily Chart

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Eli Tesfaye

Senior Market Strategist
Eli started his career in the futures and options market while he was in graduate school finishing up his MBA in 2003. Eli specializes in Automatic trading strategies and systematic options trading strategies in futures market. He has been Series 3 license holder since 2005. Eli's is an avid reader, runner, and yoga practitioner.
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