We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
GBP/USD
Mixed
USD/JPY
Bullish
Gold
Bullish
Oil - US Crude
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Bitcoin
Bearish
More View more
Notice

DailyFX PLUS Content Now Available Freely to all DailyFX Users

Real Time News
  • Join @DavidCottleFX 's #webinar at 4:00 AM ET/8:00 AM GMT for your weekly update on the top Asia Pacific market drivers that traders should watch this week. Register here: https://t.co/HNf3Axw8s5 https://t.co/KUJecuuyWg
  • Indices Update: As of 07:00, these are your best and worst performers based on the London trading schedule: US 500: 0.36% Wall Street: 0.32% France 40: -0.10% Germany 30: -0.32% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/m9Hm0d41Lt
  • European Opening Calls From IG: #FTSE 7345 +0.00% #DAX 12433 -0.28% #CAC 5675 -0.27% #IBEX 9151 -0.31% #STOXX 3558 -0.39%
  • What is prop trading and how can retail traders benefit? Tune into the #podcast episode featuring Morad Askar, aka Futures Trader 71. Only on Global Markets Decoded. Tune in here: https://t.co/2jDvD9L1Er https://t.co/STqSwY7OBT
  • Crude Oil Prices May Fall on ECB Commentary, US PMI Data - https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/commodities/2019/09/23/Crude-Oil-Prices-May-Fall-on-ECB-Commentary-US-PMI-Data.html?utm_source=Twitter&utm_medium=Spivak&utm_campaign=twr #CrudeOil #ECB #PMI #OOTT
  • Germany 30 IG Client Sentiment: Our data shows traders are now at their least net-long Germany 30 since May 04 when Germany 30 traded near 12,460.20. A contrarian view of crowd sentiment points to Germany 30 strength. https://www.dailyfx.com/sentiment https://t.co/szH9YPYhHG
  • RT @LiveSquawk: UK PM Johnson: Do Not Wish To Elevate Belief There Will Be A New York Breakthrough On Brexit -A Great Deal Of Progress Has…
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 98.07%, while traders in France 40 are at opposite extremes with 88.92%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/OrePrrlL0a
  • (ASEAN Fundamental Outlook) US Dollar ASEAN Outlook Bullish, Trade Deal Hopes Fade, PHP at Risk #ASEAN #USD #USDPHP #TradeTalks - https://www.dailyfx.com/forex/fundamental/article/special_report/2019/09/23/US-Dollar-ASEAN-Outlook-Bullish-Trade-Deal-Hopes-Fade-PHP-at-Risk.html?utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/0V1NIlGFuR
  • Forex Update: As of 04:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.25% 🇦🇺AUD: 0.20% 🇬🇧GBP: 0.15% 🇨🇭CHF: -0.02% 🇨🇦CAD: -0.06% 🇯🇵JPY: -0.15% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/kxpBDlDSEt
Silver Prices Seek Support, Rebounds Likely to Be Short-lived and Here is Why

Silver Prices Seek Support, Rebounds Likely to Be Short-lived and Here is Why

2016-05-26 09:36:00
Paul Robinson, Currency Strategist
Share:

What’s inside:

  • Silver prices moving into support zone of importance
  • A meaningful bounce could develop, but…
  • It is likely to be short-lived given the extreme positioning present in the futures market

The price of silver went wild during all of April, but has been tamed considerably during the month of May, giving back more than half of those gains. The multi-week decline is bringing silver back to a key point in that April ride higher – the neckline of a broad inverse head-and-shoulders which came shy of its reaching its measured move target around the 18.40 mark.

The area surrounding 16 is an important one as it has held clear influence on the price of silver dating back to September of last year. The risk of a meaningful bounce is increasing as it enters this critical area, but the view at this time is any bounce which should unfold will not likely be sustained.

Here is why.

Market positioning in the futures market, just as it is in gold (discussed here), is highly unfavorable for a price advance until net positioning normalizes. Below, the chart shows the record net long position held by large speculators (hedge funds, trend followers), with a nearly equally impressive net short position currently held by commercial hedgers.

Silver Market Futures Positioning

Silver Prices Seek Support, Rebounds Likely to Be Short-lived and Here is Why

An unwinding of this extreme situation is set to put a damper on precious metals for the foreseeable future. This doesn’t mean the metals can’t bounce, though, it just means upside gains are expected to be unsustainable.

With that said, in the near-term a relief bounce could unfold as support takes hold. It is presently trading modestly higher at the time of this writing. If 16 is taken out, then we will watch how silver responds to the trend-line off the January lows.

Silver (XAGUSD) Daily

Silver Prices Seek Support, Rebounds Likely to Be Short-lived and Here is Why

Handling this from a trading perspective: If already floating a profit on a short-trade, buttoning up trailing stops is a prudent decision at this juncture. Initiating fresh short positions with support so close at hand presents a potentially dangerous proposition; even though positioning suggests lower prices, sharp bounces, even if short-lived, put one at risk of taking a loss before seeing further declines. Ideally, a bounce back towards the upper parallel of the channel off the May 2 peak presents trouble and offers up an entry to join the trend lower. Aggressive counter-trend traders may look to play a bounce if silver ‘acts right’ around support, but keep in mind the bounce is likely to not last. By acting right, we mean a solid probe of support followed by a sharp daily reversal.

Find out how you can improve your trading through our guide, “Traits of Successful Traders”.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter @PaulRobinsonFX, or email him directly at instructor@dailyfx.com.

provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.