RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Metals

Silver Resumes Slide, Defines New Key Bear Risk

Posted 05/02/2019 7:53AM CT | RJO Market Insights

The market’s relapse yesterday below 23-Apr’s 14.70 low and our short-term risk parameter confirmed our suspicions that late-Apr’s recovery attempt was just an interim correction within our broader bearish count introduced in 01-Mar’s Technical Blog calling for at least a major correction of Nov-Feb’s entire 13.86 – 16.195 rally.  The important by-product of this resumed weakness is the market’s definition of 26-Apr’s 15.12 high as the latest key corrective high the market now is required to recoup to confirm a bullish divergence in momentum, stem the downtrend and expose potentially significant gains thereafter.  Until and unless such 15.12+ strength is shown, further and possibly accelerated losses are expected.  In this regard this 15.12 level becomes our new key risk parameter from which a resumed bearish policy and exposure can be objectively rebased and managed.

Silver 240 Minute Chart

 

Silver Daily Chart

The daily chart above shows the resumed 2-month downtrend and the developing POTENTIAL for a bullish divergence in momentum  Proof of strength above 15.12 is required to CONFIRM the divergence signal to the point of non-bearish action like short-covers and cautious bullish punts.  Until and unless such 15.12+ strength is shown, the downtrend is intact on all practical scales and should not surprise by its continuance or acceleration.

Against the backdrop of the:

  • extent and impulsiveness of Nov-Feb’s rally
  • historically bearish sentiment levels in Nov and once again and
  • the market’s rejection of the lower recesses of the 3-1/2-YEAR range

a major BASE/correction/reversal environment remains in play.  And on this larger scale the past couple months’ relapse cannot be ignored as a corrective buying opportunity for long-term players.  But if this is the case, then somewhere between spot and Nov’s 13.86 low the market would be expected to break this downtrend with a confirmed bullish divergence in momentum and reject/define a more reliable low, support and risk parameter from which bullish decisions can only then be objectively based and managed.  In lieu of such a relapse-stemming bullish divergence in mo, there’s no way to gauge the depth of this correction OR the prospect that this major base/reversal count is just flat out wrong and that the secular bear trend is prepping for a crash-&-burn to new lows below Dec’15’s 13.62 low.

These issues considered, long-term players remain advised to maintain a bearish policy with a recovery above 15.12 required to negate this call and warrant its cover.  Shorter-term traders whipsawed out of bearish exposure following 26-Apr’s bullish divergence in short-term mo are advised to resume a bearish policy at 14.70 OB with a recovery above 15.12 required to negate this call and warrant its cover.  In lieu of such 15.12+ strength, further and possibly accelerated losses should not surprise.

Silver Weekly Chart

RJO Market Insights

RJO Market Insights specializes in forward-thinking analysis, focused on potential market-moving events and dominant factors driving price discovery. Detailed fundamental and technical coverage across multiple commodity sectors is combined with objectively-constructed trade recommendations to provide an industry-leading product for R.J. O’Brien’s Institutional clients, commercial hedgers, introducing brokers and individual investors free of charge. Content is distributed in both text and audio formats, with specialized service offerings provided by account type.
For more information on RJO Market Insights, contact your broker or RJO representative.