RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

July silver is trading $16.73, down 40 cents on the day. Silver weakness is credited to FOMC minutes. The weakness in silver wasn’t so much from the 25 bp rate hike, but rather from the language communicated. To summarize, the Fed’s take on inflation so far is rather “weak” in that they will not back down from further rate hikes. With that in mind, it will be wise to pay attention inflation data going forward to see if the Fed will be derailed from their intent upon tightening monitory policies. The Fed is poised to do three rate hikes by end of 2017. As I stated in previous articles, the long term support is still around $15.00 and near term support sits around $16.00. Bulls need to exercise caution in light of technical damage wrought upon the silver charter in the last two sessions. One can’t rule out liquation below $16.00 for a short term. As see the chart below, a sustained close above 17.05 could switch the momentum back to the bulls camp.  

The Commitment of Traders with Options report (COT) reading from May 30 vs June 6 was up about 4877 contracts to net 75,997. However, weakness in the past two sessions would probably show net reduction from the June 13 reading that gets released tomorrow. In the past, I have discussed the possibility of a near-term low off the $16.00 lows. Clearly, the severe chart damages has been done on silver market. 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 (as shown on the chart below) 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. 

 

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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