December silver is trading $14.71, up about 10 cents on the day. Once again, silver is on the defensive as it continues to price the Fed’s hawkish stance. The strength in the U.S. dollar today is adding a great deal of pressure across the board and silver is no exception. The weekly chart below suggests that the downside pressure is waning, please be cautious as the overall trend is still down. If price closes positive this week in front month December contract, follow through price action to the upside is likely.

In my last blog, I mentioned that the gold/silver ratio is at a 25-year high. Currently, the ration is trading around 83.72. the technical improvement in silver could move this spread below 80.00 in the coming weeks.  

From a technical perspective, a trade below 14.25 in the December contract will accelerate downside momentum. Current upside target is 15.60 to 16.00. Again, from current levels of $14.60, mid 15.00 is likely if the market manages to stay above last week’s low of 14.25.

Bullish Butterfly/bull call options with a limited risk might be ideal in this market, or look at the 1000 ounces mini contract to test the waters.

Silver Weekly Chart

Gold Dec '18 Daily 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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