Commodities

Technical analysis – Silver looking bearish heading towards 61.8% Fibonacci

Posted on March 12, 2020 at 9:40 am GMT

Anthony Charalambous, XM Investment Research Desk

Silver sellers appear to be in control as the commodity is nearing the 16.32 barrier – that halted previous declines – which is the 61.8% Fibonacci retracement of the up leg from 14.28 to 19.63. The negative push seems to have backing from the downward sloping 50-day simple moving average (SMA) and the momentum indicators.

The MACD, in the negative zone, is declining below its red trigger line, while in the bearish region the RSI is heading for the 30 mark. Furthermore, the %K and %D lines of the stochastic oscillator are downward sloping and have room to move towards the oversold section, suggesting additional declines. That said, the SMAs warn of their intact neutral-to-bullish bearing which could reverse the commodity from the 16.32 level.

Heading south, immediate strong support comes from the area 16.38 to the lower Bollinger band, which also captures the 61.8% Fibo of 16.32. Conquering this barrier, the commodity could tumble for the 15.91 swing low of August 1. If selling interest persists, the 76.4% Fibo of 15.53 could come under pressure before the plunge reaches the 14.88 low.

Otherwise, if the 16.32 border holds, initial resistance may come from the 50.0% Fibo of 16.95 and the 200-day SMA at 17.11. Overcoming these, a key region from the 100-day SMA at 17.48 to the 50-day SMA at 17.71 – which encapsulates the mid-Bollinger band and the 38.2% Fibo of 17.58 coinciding with the swing high – could prove a tough obstacle to surpass. Overrunning this the 18.21 resistance and the 23.6% Fibo of 18.36 could impede the price from reaching the upper Bollinger band and the previous tops.

Summarizing, the shiny metal sustains a cautiously bearish stance above 16.32, with only a break below confirming a negative outlook and a bearish crossover by the 50-day SMA reinforcing this view.

silver

Legal disclaimer: The material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instruments. XM accepts no responsibility for any use that may be made of these comments and for any consequences resulting in it. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. The research and analysis does not involve any specific investment objectives, financial situation and needs of any specific person who may receive it.

It has not been prepared in accordance with legal requirements designed to promote the independence of research, and as such it is considered to be marketing communication. Although we are not specifically constrained from dealing ahead of the publication of our research, we do not seek to take advantage of it before we provide it to our clients. We aim to establish, maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. We operate a policy of independence, which requires our employees to act in our clients’ best interests and to disregard any conflicts of interest in providing our services.

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losing all of your invested capital, so please make sure that you fully understand the risks involved.