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Too Early to Call Silver at Near Term Lows | RJO Futures

Posted 05/12/2017 11:10AM CT | Eli Tesfaye

July silver is trading $16.41 up, about 15 cents on the day. My previous articles discussed the potential for a near-term bottom around $16.00 from technical analysis on the weekly chart. Although it has been a relief for the bulls to see a bit of rally in the past two days, I think it is too early to assume the bottoms are in near-term silver. From the fundamental perspective, several factors have been given credit for pop in the silver market, the main one being technical near term oversold type of price action. Another factor in my view is that the shakeup in Washington over the firing of the FBI director, and the ongoing investigation of the current administration and the alleged Russian ties. Massive recovery in crude oil, as well as a bit of a breather in equities, also gave Silver bulls a minor edge. The commitment of traders with options report for the week ending May 2 shows a reduction of continuous reduction of the non-reportable and non-commercials combined position. With the absence of real geopolitical risk, I’m not sure the bulls can substance this pop in silver price.

From a technical perspective, last week I mentioned that “I’m getting less and less bearish as prices continue to decline into weekly support lines.” Frankly, $16.00 better hold or else more price pressure to the downside will happen as the result of discouraged bulls abandoning the market. But then again, any sustained close above lows $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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