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Silver once again fell on Friday as upbeat data lifted the greenback. White metal has however started showing signs of bullish strength which means a reversal might be in play very soon.
The metal is being traded around $19.13 per ounce at 06:09 GMT in Asia. Immediate support is seen around $18.98 which is low of January 30; a break below this level shall target $18.62 i.e. low of 31st December and double bottom support zone. A fall below $18.62 may push the white metal into deeper bearish trend targeting $17.00.
On upside, resistance may be noted around $19.66 that is 23.6% fib level and 55 Daily Moving Average (DMA), a break above shall target $20.28 which is 100 DMA and 38.2% fib level ahead of $20.83 i.e. 200 DMA and 50% fib level.
Relative Strength Index (RSI) as well as Commodity Channel Index (CCI) both are dipping below oversold territory. In addition, positive divergence can also be noted with MACD which means a bullish reversal could be in play very soon.
It is pertinent that current market price of silver is well below its cost of production thus miners are operating at loss, they might not afford loss for a longer period of time and ultimately consider closing down their mines. This will create steep fall in Silver production and in turn price will tend to rise.
Last week we saw a number of upbeat reports about the US economy that lifted the greenback considerably. Federal Open Market Committee (FOMC) trimmed monthly bond purchases by $10 billion to $65 billion on Wednesday. A day after, commerce department figures showed that consumer spending surged to the highest level since 2010 and consequently world’s largest economy grew at 3.2% in fourth quarter. Since USD is negatively correlated with silver price, so we saw significant fall in white metal price.
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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
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