RJO FuturesCast

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Metals

Silver is Benefiting from Dollar Weakness

Posted 08/24/2018 10:39AM CT | Eli Tesfaye

September silver is trading 14.73, up about 19 cents on the day. With the US dollar pulling back from two-year highs, Silver and quite frankly all other dollar-denominated assets are benefiting from it. As of now, the silver is showing “inside week” as per chart. A breakout out of these levels is needed to get a follow-through price action. The last e-view, I wrote about the dollar is in consolidation and poised for a breakout. The US dollar is coming back to that consolidation area. We shall see what will happen when and if the dollar heads up in the direction of the trend.

Today is also the beginning of the Fed meeting in Jackson Hole meeting. I’m sure there will be a possibility in pausing interest rate to slow down dollar rally that is crashing commodities. I’m sure at Jackson Hole, and the Fed will probably try to assess the impact of trade wars on the US and global growth. Silver is heading to its psychological level of 15.00; any dollar recovery will determine any upside price action above that.

The technical landscape favors bulls, as today’s COT (commitment of traders with option report) will probably show a slight reduction in silver shorts. With the recent strength in Silver, the retest of $15.25 price range is likely. A break below 14.45 in September contract, would likely set a new downside pressure forcing the market to go below 14.00. Option play seems to be an effective way to approach this market for a breakout type of strategy.

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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