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Talking Points
- Silver breaks under 200-day moving average
- Confluence zone near 14.50 in focus
Silver – Next Few Days Important For The Metal
An interesting divergence has developed between Gold and Silver over the past couple of weeks. Gold remains in a holding pattern above the October high, while Silver has broken lower from its consolidation to trade under the 200-day moving average. I have generally been looking for the end of the quarter/start of 2Q to be some sort of big inflection point for the two metals from a timing standpoint so I have been trying to stay relatively “agnostic’ until then.
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That all said, the price picture in Silver is getting rather interesting. The high earlier in the month came from the median line of a pitchfork drawn from the August/December lows and the October high. Following the break of the 200-day moving average on Friday, focus is now on the lower parallel of that same structure as it coincides with the 61.8% retracement of the December – February range and the 50-day moving average. The looks to be a fairly clear attraction area for the market in the days ahead with the reaction around there likely to have a lot of technical implications for the metal in March. A clear break of this zone around 14.50 opens the door to another leg down in the weeks ahead - possibly towards last year’s low. However, this could very well set up a very important low given the cyclical considerations at quarter-end. Counterintuitively, a successful hold of the 14.50 zone over the next few days that is followed by a strong rally would set up a potentially important top into the critical late March/early April cyclical period.
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--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
To contact Kristian, e-mail instructor@dailyfx.com. Follow me on Twitter @KKerrFX
