FUNDAMENTAL
OVERVIEW
Silver came under heavy selling pressure yesterday after Trump
rejected Iran’s proposal to reopen the Strait of Hormuz and said he
expected the US to resume bombing Iran after the midterms.
The outlook initially looked increasingly negative, but sentiment improved somewhat
during the US session as a series of headlines pointed to potential US
concessions.
According
to Axios, Trump has reportedly offered Iran sanctions relief and access to
frozen funds in exchange for progress on the nuclear programme, although the US
President later denied the reports.
Trump did confirm, however, that American and Iranian negotiators are
holding talks through mediators. Meanwhile, Iranian Foreign Minister Araghchi
said he expected Tehran to receive a formal response to its proposal to reopen
the Strait of Hormuz today.
The focus will therefore remain on US-Iran developments. A breakthrough
could support silver as expectations for aggressive Fed rate hikes will likely ease.
Conversely, a negative outcome would likely keep pressure on the precious
metal.
SILVER TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that silverbroke below the key 63.00
support after Trump rejected Iran’s proposal. All else being equal, the natural
target should be the 55.00 handle. If we get a retest of the broken support now
turned resistance, we can expect the sellers to step in there, with a defined
risk above it, to keep targeting the 55.00 handle. The buyers, on the other hand,
will want to see the price breaking higher to extend the pullback into the
downward trendline.
SILVER TECHNICAL ANALYSIS –
4 HOUR TIMEFRAME
On the 4 hour chart, we
have a minor downward trendline defining the bearish momentum. If we get a
pullback, we can expect the sellers to lean on the trendline, with a defined
risk above it, to keep pushing into new lows. The buyers, on the other hand,
will look for a break higher to extend the pullback into the 63.00 resistance.
SILVER TECHNICAL ANALYSIS –
1 HOUR TIMEFRAME
On the 1 hour chart, there’s
not much we can add here but we can clearly see that the strong bearish
momentum has waned for now. If the price breaks above the 61.00 handle, the
buyers might start positioning for a pullback into the 4-hour trendline. The
sellers then will look for a counter-trendline and wait for a break to pile in
for new lows. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today, we get the US Consumer Confidence report and the US Job Openings data.
Tomorrow, we have the US ADP and the US PCE price index. On Thursday, we get
the US ISM Manufacturing PMI and the latest US Jobless Claims figures. On
Friday, we conclude the week with the US NFP report. The focus, though, will
remain on US-Iran developments.
This article was written by Giuseppe Dellamotta at investinglive.com.