The June FOMC spike in US real yields drove silver to a 25.53 low. Momentum loss and a low read on CFTC open interest would allow silver to recoup some of June’s 10.6% decline. However, there are resistance levels to cross. 28.03 which sits on the boundary line of a triangle pattern on the weekly charts in one to look out for. Below that, there is a Fibonacci marker at 27.16, as Benjamin Wong, Strategist at DBS Bank, notes.
The mid-week release of FOMC minutes is a near-term factor to mull over
“On the weekly charts, silver’s decline was arrested at 25.53 by a trend support line that goes back to 19.25, that hosted late July 2020’s lows. The DMI ADX momentum indicator shifted to neutral grounds, with both +DMI (bullish) and -DMI (bearish) both stacked around a 19-20 read (we need a read around 23 to extract momentum of any substance).”
“The near-term scope of further range hemming as a triangle pattern that requires resolution seems a possibility.”
“With support pegged at 55-day moving average of 25.28 and at 25.02, silver has the opportunity to do a mild grind up in prices, from its recent 25.53 lows.”
“It is likely for silver to do a recoup of the ground it yielded in June, but there are limitations, given low momentum. This implies that the dropped-down boundary line on the triangle that yields resistance at 28.03 remains a stumbling block. The 61.8% Fibonacci retracement of the mid-May peak at 28.17 against the recent 25.53 lows at 27.16 is the first locus point ahead.”
“We continue to embrace a cautious stance as advocated on our prior guidance, while continuing to seek a medium-term level of value. The June FOMC hawkish tilt has altered the dynamics.”
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