RJO FuturesCast

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Metals

Silver – Advancing Soldiers or Reversal

Posted 11/21/2018 8:28AM CT | Tom Beller

Last week, silver had a technical three bar advancing soldier pattern recognized by Japanese candlesticks, which usually means strength ahead.  However, Monday showed us topping out a bit and Tuesday having an $.11 cent break.  What do we make of it?

With all the uncertainty in outside markets, and both the equity indexes and the oil market taking a nosedive, there seems to be a great deal of skepticism, which I believe bodes well for the metals markets, especially silver.  While bears may technically have the advantage in the short-term, I believe it will be short lived. 

Silver found support at $14.00 an ounce in the December futures this month and we have resistance at $14.85, prices need to break through one of these levels to get any excitement stirred up in this contract.  We expect more volatility ahead in the outside markets until we get more from the G20 meeting, which is November 30th.  Not sure if much will come out of the meetings, so investors may be wary of equities with this year not posting any gains, shifting money into the metals markets toward year end and seeking a safer haven for assets. 

The options in January silver, with 35 days left until expiration, show an implied volatility of 18.5% and the at the money straddle is priced at about $.66 cents, signifying a break-even level of .66 above and below current futures price of $14.47, which is roughly the same support and resistance levels we have outlined above.  It is hard to see anything getting excited about until we break out of support or resistance.

Silver Dec ’18 Daily Chart

Silver Dec '18 Daily Chart

Tom Beller