Commodities

Technical Analysis – Silver consolidates near 1-year lows; bearish in long term

Posted on August 31, 2018 at 1:34 pm GMT

Christina Parthenidou, XM Investment Research Desk

Silver turned increasingly bearish after it dropped below the 16.00 key-level, the bottom of its range-bound trading recorded between early February and mid-June, printing lower lows and lower highs until it reached one-year lows at 14.31 on August 16. Since then, the market has been moving sideways, with the RSI and the MACD supporting that chances for a bull market are minimal in the short-term; the RSI is negatively sloped below 50 and the MACD holds steady marginally above its red signal line and far below zero.

If the price extends to the downside, support may come between 14.31 and the July 2017 trough of 14.28. A failure to hold above that zone could send the market down to 13.60, a level last seen in December 2015, while steeper declines could also unlock the 13.00 psychological mark before reaching 12.00, a frequently tested area during 2008-2009.

On the flip side, a correction to the upside could quickly meet the 20-day simple moving average currently at 14.85, ahead of the 23.6% Fibonacci of the downleg from 17.30 to 14.30, at 15.00. Further up, bullish actions could try to close the day above the 38.2% Fibonacci of 15.46, seen as a strong resistance during the past couple of weeks. Even higher and above the 50% Fibonacci of 15.80, traders could confirm the start of an uptrend.

In the bigger picture, silver is trading bearish below the Ichimoku cloud and under all its negatively-sloped moving averages.

commodities 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.