Silver Technical & Fundamental Outlook |12 Dec 2013

Suggestion for Trade: Sell on daily close below (trendline support) $19.86, Stop Loss above trendline at $20.16, target $18.19

Silver yesterday traded in 25 pips range to give a negative closing at $20.29. At the moment of writing XAG/USD is being traded at $20.25 during Asian session.

Major Support & Resistance Levels

Silver is likely to find an immediate support at $19.86 (trendline support), a break and close below this level may push the commodity into relatively stronger bearish trend, opening doors for $18.19 (100% retracement and low of June 23, 2013). Other important support levels include $20.20, $19.91, $19.82, and $19.67 that are various Moving Averages on hourly and four hour timeframes.

On upside, the commodity is expected to face an immediate hurdle around $20.95 (55 DMA), ahead of 21.57 to 21.77 region which is considered a very strong resistance zone as trendline, 100 DMA and 200 DMA all are sitting in this area, a break and close above this level may allow silver find new buyers thus opening doors for $24.68 and $25.25.

Technical Indicators

At the moment MACD is very bearish with strong negative divergence on hourly timeframe suggesting that the commodity may test $19.86 support very soon. RSI is neutral which shows that long moves might be in play in near future.

Fundamental Situation

A lot of volatility is expected as we have a series of important events scheduled for today starting from SNB Interest Rate Decision, ECB Monthly Report, SNB Press Conference and then we have US retail sales data for the month of November later in the US session, market expectation is 0.6% this time around against the previous reading of 0.4%. Then in the US evening session investors will be monitoring speech of Bank of Canada (BoC) Governor Poloz. Earlier in Sydney session, Reserve Bank of New Zealand kept its bench mark interest rate unchanged at 2.5% as per market expectation.