Silver: May Bounce, Price at Lower End of its Recent Range

Yesterday, silver prices slid 14 cents and reached $13.75. This gives range-traders the opportunity to enter long positions with stops below the December low of $13.61.Take profit orders will most likely be placed in the vicinity of $14.25. The assumption and root of this strategy is for price to be firmly trapped in the $13.61 to $14.40 range.

On the other hand, macro traders and trend-followers will not buy silver prices being near the lower end of the recent range. Instead, they will wait for a break to the December low of$13.61 given that the longer-term trend is bearish. The macro-outlook is also bearish as the Fed projects a raise to current rates in 2016, which should in turn underpin the Dollar’s strength.

A great deal of data is on tap today and if the data on average is softer than economists predict, we may see a bounce in silver prices as soft stock markets increase demand for silver whilst decreasing demand for the Dollar. However, better than expected outcomes may have the opposite effect, in a softening of silver and a gain in the Dollar.

Key data to watch is Industrial Production as it’s this sector which is soft in the U.S. economy, while U.S Retail Sales is where the strength lies. U.S. PPI is interesting as it will show whether the Fed needs to hike rates early or whether it should delay. See our economic calendar.

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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

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