Price is firmly trapped in the $13.61 to $14.40 range making it hard to predict what will happen next. However, we know that price usually reacts as it reaches the edges of this trading range.
Range traders will most likely short-sell silver as it reaches $14.25 with stops above the December 28 high of $14.40. Take profit orders are being placed near this week’s low of $13.73. Where they book profits on short positions, they will also turn long with stops below the December low of $13.61.
Longer-term trend followers and macro traders betting on a stronger dollar will apply a similar strategy, but will keep a short-position from $14.25 for a break to the December low of $13.61. When and if price indeed breaks $13.61, it will trigger yet another sell signal, which may take price to the October 19, 2009 low, with some traders using this signal to add to their bearish positions.
For now price is not reacting to any of the major stories and is remaining stable, even as stock markets decline. Data on tap today isU.S Jobless claims at 13:30 GMT; a Bloomberg survey projects a decline to 275K from 277k and I don’t expect this data to break the range.
Don’t Get Left Behind, Learn What FXCM’s Most Successful Traders Do on a Consistent Basis, sign up for our free guide here.
Silver | FXCM: XAG/USD
Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano
--- Written by Alejandro Zambrano, Market Analyst for DailyFX.com
Contact and follow Alejandro on Twitter: @AlexFX00
Struggling with Trading? Join a London Seminar
Get Alejandro’s daily market update in your inbox, please fill out this form
