RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Metals

Silver Working Through Consolidation

Posted 04/06/2018 10:08AM CT | Eli Tesfaye

May silver is trading 16.455, up about 10 cents on the day. In previous articles I discussed how silver was putting potential bottom like structure on the charts. As I have stated before, near-term lows are in despite weaker performance by silver in the light of a weak dollar this morning.  The trade has been that silver is trending opposite of equities. The May contract is bouncing off yesterday’s lows of 16.15. Technically, a close above 17.00 is needed to confirm the downtrend has come to an end. Recent headlines of potential “trade war” with China is giving flight to safety type of support to the metals in general. As I have mentioned previously, longs should come on strength rather than pick a bottom. I think the recent strength in silver is a catalyst for higher price action. With punch and counterpunch moves of US and China, silver is getting an opportunity to shine once again even though it has been a little disappointing that the strength in silver has not been material.

Bulls should be encouraged that silver is not melting down with equities, rather silver is trading opposite to indices. As I have said before, dips should be seen as an opportunity to buy rather than sell. Remember, silver has been in consolidation for a very long time as the chart below shows. Breakout outside the specified range should be material in my view. Proper money management is key to trading successfully, along with sound strategy. I would be happy to talk to you about trading ideas in the silver market. The Employment Situation number from this morning shows that the fundamentals of the US economy is still solid. The wild card here is the impact of a trade war with China that hasn’t been factored in the market yet. For now, silver seems to be benefiting from it.

Silver May ’18 Daily Chart

Silver May '18 Daily Chart

800-367-7290312-373-5394Series 3 Licensed

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.
Read More