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Silver Prices Jet Higher as Expected, Resistance Presents Hurdle

Silver Prices Jet Higher as Expected, Resistance Presents Hurdle

2016-06-08 10:43:00
Paul Robinson, Strategist
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What’s inside:

  • Silver blasts off as anticipated, reaches into resistance zone
  • Follow-through trade may not be done, but need to wait on reaction from resistance
  • Support lies around 16.50 on a pullback

The last time we discussed silver prices we made note of the strong upward momentum in precious metals as a result of the big NFP miss and dollar sell-off on Friday, and that it was likely to result in follow-through in the near-term.

Monday's commentary: "A pullback may take shape initially off resistance, but strong surges like the one we just witnessed tend to take a little time before becoming fully exhausted. With that said, the top-side parallel looks poised to be overcome in the days ahead."

Yesterday, silver prices made an attempt to dip lower from the upper parallel off the 5/2 peak, but found support at an area of congestion formed back during mid-April and late-May in the vicinity of 16.20.

The upper parallel we noted previously as resistance, as we are seeing today, proved to only be a temporary stopping point as silver makes good on its Friday pop.

The one-day move has already brought the resistance zone between 16.70 and 16.90 into play. This area could be tough for the metal to contend with in the immediate future given its effectiveness as support during the April rise and prior to it coming unglued during the middle part of May; old support becomes new resistance. Looking at the intra-day time-frame, horizontal resistance also coincides with the top-side of a short-term upper parallel.

Just as we saw no strong adverse reaction to Friday’s rally into the upper parallel, we will look to see if silver can do the same at current resistance. Depending on how it reacts from here will help shape our bias moving forward. If the 16.70/90 zone induces a sharp reversal, then we will know where the line-in-the-sand is on the upside. However, if silver consolidates gains around this area with sellers seemingly absent, then a break towards higher ground may take shape. Support comes in around two prior inflection points surrounding 16.50.

For now, the short-term edge we had it gone, but with a little time we should see another set-up evolve - one way or another. From a broader viewpoint, we are still skeptical about a sizable advance being sustainable.

Silver Daily

Silver Prices Jet Higher as Expected, Resistance Presents Hurdle

2-hour

Silver Prices Jet Higher as Expected, Resistance Presents Hurdle

---Written by Paul Robinson, Market Analyst

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

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

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