There's Silver in them thaar hillsWhen the commercials (large users of Silver, e.g. Solar Panel manufacturers) get close to net long Silver Futures, it often signals we're close to a bottom
TSI1! trade ideas
Silver chart analysisThe price of silver retreated from yesterday's high of $20.83 to this morning's low of $20.35. We now have support there, and we could rise above the $20.50 level again. Then we would have a chance to visit the $20.75 level once again and try to move on to $21.00, the next higher target. For a bearish option, we need a negative consolidation and pullback of prices to the $20.25 level. Additional support at that point is in the MA200 moving average. The price break below takes us down to $20.00. After that, if the bearish pressure continues, the price of silver could fall even lower. Potential lower targets are $19.75 and $19.50 levels.
SI D1: buy by market on MO TP 22.50Silver is going to demonstrate more bullishness unlike Gold to set a long-run top prior the further drop till the end of Nov. Thus, this bullish trade might be considered as a hedge for the further strategic bearish positions. Note, that the end of this week is the final dates to set this local high.
Silver Beginning Minor Wave CSilver has completed minor wave B, bouncing off the 0.786 Fibonacci level on Monday, August 22. We should now be in minor wave C.
There are a few possible highly clustered targets for wave C.
21.560: the minimum target. This is where wave C would equal wave A.
21.635: the 0.382 Fibonacci level.
22.565: the minor wave 4 extreme.
22.755: the 0.5 Fibonacci level.
While wave C can go above the 22.755 level without breaking any Elliott rules, it will most likely terminate in the 21.560-22.755 range.
Not a silver lining.Silver is special as it is both an industrial and precious metal. So, let’s look at Silver from both points of view to identify what seems to be dimming the shine on this metal.
As a precious metal, we can compare silver with the dollar and yield as both affect the demand for precious metals. Dollar and silver are generally negatively correlated, with a stronger dollar leading to weaker silver. In the chart below, we see this relationship at play until the start of February 2022, when it started to weaken. It seems the effect of a rapidly strengthening dollar has not been reflected in the prices of silver and we expect this gap to close, resulting in lower silver prices.
The 10-year yield also provides us with a reference to understand where silver might trade at. A high yield environment is often considered headwind for precious metals as investors prefer holding yield-generating assets in such periods. In the chart below, we see can observe the roughly negative relationship between yields and silver, with periods of lower rates showing higher silver prices and vice versa.
With the Federal Reserve indicating that they are still not done with the rate hikes to combat inflation, silver might take a dent in upcoming rate hikes.
Secondly, we can look at business and consumer confidence to gauge the potential demand for silver as an industrial metal. Generally, higher business and consumer confidence indicate expansionary periods, which translate to higher demand for industrial metals. With the University of Michigan consumer confidence index at a low and United States Business Confidence Index turning lower, such negative outlook will slow demand for silver as a form of industrial metal, potentially adding resistance to prices.
On the technical front, silver is sitting right on the 19-dollar level, which has acted as a key support & resistance level over the past 10 years. An attempt to breach this level a few weeks ago was rejected and prices are now back to retest this support. On a shorter timeframe, we also see silver in a descending channel pattern indicating a downwards continuation pattern.
With the dollar strengthening, higher yields, and downbeat business and consumer confidence, the macro backdrop for silver does not look rosy. Overlaying that with the bearish technical price action, we think Silver is likely to struggle.
Entry at 18.960, stops at 20.160. Targets at 16.620.
The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
Disclaimer:
The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios.
