FUNDAMENTAL
OVERVIEW
Silver has been under heavy pressure recently as Treasury yields and the US
dollar have continued to rise amid a deteriorating geopolitical backdrop and
renewed strength in oil prices.
Silver could come under further pressure in the coming days if oil prices
extend their gains following reports from The Atlantic that the White House
asked the Pentagon to develop military options for strikes against Iranian
targets, potentially before the midterm elections.
Moreover, the Pentagon has reportedly instructed the US Central Command
(CENTCOM) to complete preparations for potentially resuming major combat
operations, according to Axios.
No final decision has been made yet, but the renewed escalation risks are
supporting the oil market again. If this continues, Treasury yields could
extend their gains while rate hike expectations strengthen further, adding
pressure on silver.
If the situation does not de-escalate soon, we could see further weakness
in silver. However, if the Fed continues to sound more dovish than markets
expect, real yields could decline and provide a floor under silver prices.
SILVER TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that silverhas been falling steadily
amid the deteriorating geopolitical picture. The natural target for the sellers
should be the 55.00 handle. If the price gets there, we can expect the buyers
to step in, with a defined risk below it, to position for a rally into the
71.55 level. The sellers, on the other hand, will want to see the price
breaking lower to increase the bearish bets into the 45.55 level next.
SILVER TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we have
a downward trendline defining the bearish momentum. If we get pullback, we can
expect the sellers to lean on the trendline, with a defined risk above it, to
keep pushing into the 55.00 level. The buyers, on the other hand, will look for
a break higher to extend the pullback into the next major trendline, with the
62.00 resistance as the first target.
SILVER TECHNICAL ANALYSIS –
1 HOUR TIMEFRAME
On the 1 hour chart, we
have another minor downward trendline that could act as resistance. The sellers
might split their short orders in half given the closeness of the two
trendlines. The buyers, on the other hand, will look for breakouts to pile in
for new highs, with a defined risk below the trendlines. The red lines define
the average daily range for today.
UPCOMING CATALYSTS
Tomorrowwe conclude the
week with the University of Michigan Consumer Sentiment survey, but the focus
will remain on US-Iran developments.
This article was written by Giuseppe Dellamotta at investinglive.com.