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Is Silver About To Reverse Its Trajectory?

By Blackwell Global (Steven Knight)CommoditiesJun 27, 2017 02:09AM ET
Is Silver About To Reverse Its Trajectory?
By Blackwell Global (Steven Knight)   |  Jun 27, 2017 02:09AM ET
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Key Points:

  • Short term bullish trend line evident.
  • RSI Oscillator is nearing oversold whilst Stochastics indicate reversal imminent.
  • Watch for a break higher towards the $17.00 handle and $17.582 in extension.

Silver has been relatively volatile over the past few weeks as the metal has reacted to a range of changing conditions, including risks from the Fed on interest rate hikes. However, despite the recent pullback from the high at $17.714, the precious metal could be setting up to turn the corner and rally again.

Currently, the precious metal is trading around the $16.533 mark,relatively close to a key support level. Subsequently, any further downside moves would need to surmount this level and convincingly push lower to maintain its momentum. However, the risks are abating and we might be relatively close to seeing a reversal for the precious metal.

In fact, a review of the daily chart shows a relatively clear short term, rising trend line which is likely to mean plenty of support for the metal in the coming days. In addition, the RSI Oscillator is nearing oversold levels, and given that the swing lows are getting higher, we are likely to see a rally in the coming days. The Stochastic Oscillator is also representing a potential reversal with a crossover, within oversold territory, having occurred in the past few days.

Silver Daily
Silver Daily

However, despite the upside biased technical factors, it should be noted that the derivatives market for silver has seen plenty of manipulation on COMEX of late and this has strongly impacted ‘paper’ prices. Subsequently, it’s relatively difficult to predict the timing of potential breakouts given some of the opaque actors behind the scenes.

However, it is relatively clear that there is building pressure for an upside correction in the coming days. This is especially prescient given that price action is currently being squeezed between a rising trend line and the declining moving averages. Clearly, something must break and both of the oscillators seem to suggest that the upside is the probable direction.

Ultimately, silver is likely to see some bullishness in the coming days as long as it can break through the declining moving average lines. If it can surmount this level we are likely to see a significant technical rally that, given the size of the recent range, could take it back towards the $17.582 mark.

Even the fundamental perspective is positive, with a range of worsening U.S. economic data clouding the risk of further Federal Reserve action in the months ahead. Also, physical and industrial demand for silver remains buoyant, further supporting the bullish contention.

Is Silver About To Reverse Its Trajectory?
Is Silver About To Reverse Its Trajectory?

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