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Silver Prices: Technical Outlook Ahead of US Non-Farm Payrolls

Silver Prices: Technical Outlook Ahead of US Non-Farm Payrolls

Paul Robinson,

What’s inside:

  • Silver prices popped higher on BoE stimulus announcement, but quickly faded
  • Looking for low-end of the month-long range, 19.20
  • US monthly jobs report due out at 12:30 GMT

Silver prices experienced a spike higher yesterday following the release of the BoE decision to not only cut its benchmark rate to a record-low 0.25%, but also expand its QE program by £60 billion, and indicate further actions could be taken if the central bank feels it’s necessary.

The jet higher was relatively short-lived, lasting not more than about 20 minutes before reversing back lower. The bump briefly took silver back above the lower parallel of a channel we’ve made note of recently. We will be watching closely for a trend of lower lows and lower highs to emerge on the intra-day time-frames as silver comes off the top-end of a range which began a month ago. In Thursday’s commentary, we discussed our bias for a move towards the low-end of the range to at least around 19.20, and that market positioning is not favorable for sustained advances at this time. (For more, check out yesterday’s piece here.)

Today is ‘NFP-Friday’ (12:30 GMT release time). The monthly US jobs report is a reliable source of volatility, especially when the report deviates far from expectations. Analyst are looking for non-farm payrolls to come in at 180k for July, with an unemployment rate of 4.8%, down from 4.9% in June. Wage inflation is expected to remain steady from the previous month, with average hourly earnings expected to grow at an annualized rate of 2.6%. As per usual, no predictions on this end. Just that if results are well beyond expectations in either direction, a large dollar/precious metals move could unfold. Keep an eye on the dollar and how it reacts initially; often times the first move following the release will fade and with that look for precious metals to react similarly.

Levels to watch: Short-term resistance comes in at yesterday’s high of 20.50, then 20.66/76. Support arrives at Wednesday’s low of 20.03, then around 19.93/94.

Track trader positioning in real-time with the ‘Speculative Sentiment Index’.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX.

He can be reached via email at instructor@dailyfx.com with any questions or comments.

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

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