Silver Continues Winning Streak As US Data Disappoints

FXOpen

Technical Sentiment: Bearish

  • Silver rallies for fourth consecutive day
  • 15.28 remains critical support area
  • US Current Account Deficit remains worse than expectations

The price of Silver (XAGUSD) extended upside movement on Friday, increasing the white metal to more than $16.00 an ounce following the release of downbeat US economic reports. The technical bias remains bearish due to a Lower Low on the daily chart.

Technical Analysis

As of this writing, the precious metal is being traded near $16.10 an ounce. A support can be seen around $16.00, the psychological number ahead of $15.95. the 61.8% fib level and then $15.28, the swing low of the last major dip as demonstrated in the following daily chart.

Silver Continues Winning Streak As US Data Disappoints

On the upside, the metal is expected to face a hurdle near $16.43, the 50% fib level ahead of 16.89, a key horizontal resistance and then $17.00, the psychological level. The technical bias will remain bearish in the long run unless 18.46 resistance area is broken out.

Current Account Deficit

The current account deficit of the US economy remained 113.5 billion in the fourth quarter as compared to 98.4 billion in the quarter before, a government report said yesterday. This deficit was way beyond the average forecast of 103.2 billion thus incite renewed buying interest in the price of precious metals. Not to mention, prices of precious metals are negatively correlated to the US Dollar.

Trade Idea

Considering the overall technical and fundamental outlook, buying the white metal near the 16.00 support area appears to be a good strategy in short to medium term if we see a pull back on hourly timeframe. The trade should however be stopped out on a breach of 15.00 handle as described above.

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