Silver: Profit Taking Ahead of NFP Seems Likely
With the NFP report on tap, I see it as fairly likely that short-term traders will book profits ahead of the report release as even a small beat to the 190k projected outcome (Bloomberg survey), may trigger a decline to $14.50. Such a decline would not end the downward trend and as such traders may opt to enter long on a pullback to the regions of $14.50. This scenario will hold provided the NFP outcome does not grossly beat its estimate. If it does, bullish traders will probably make a dive for the exit. The trend turns bearish on a break to $14.18.
On the other hand, if the NFP forecast was to fail to meet expectations, a break to the current high of 14.95 is likely, and in this scenario silver prices may reach $15.30 over the next week. However, with risk/reward ratio not favourable for new long positions after this week’s strong gains, caution is warranted.
As always, we take a look at gold prices, and they suggest silver should be trading at $15.47 as long as gold remains at or above $1158.
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Silver Prices | 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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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.