RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Metals

Silver Fighting to Hold

Posted 09/07/2018 8:13AM CT | Eli Tesfaye

December Silver is trading $14.19, down 3 cents on the day. With the US dollar pulling back in the past few sessions, with a hefty net short non-commercial position from the most recent COT (commitment of traders with options report). Silver is looking for an opportunity to recover from these levels. A quick study of the Dollar index chart on the weekly time frame, suggests that that the index is poised for a breakout. The move by the US dollar from these levels could significantly impact the silver market.

The last e-view, I mentioned that silver is “showing -inside-week- price action.  A breakout out of these levels is needed to get a follow-through price action.” The breakdown from that inside chart formation took silver to test $14.00. The question is how much would market participants push it before it pops again?

With the Fed signaling to not to raise rates near term and China threatening to counter any tariff imposed by the US, traders hoping to capitalize on geopolitical risk type of run to the upside had to be disappointed that market is not reacted positively as well.

Technical perspective, the chart damaged done to the silver market has been severe in that as seen below, you see silver is heading to double bottom with 2016 lows. The market would likely dip below $14.00 for washout type of price action before it holds this level for a considerable time. Markets don’t tend to blow through weekly support as one might expect. Sideways price action is likely for near term.

Silver Weekly Chart

Silver Weekly 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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