Silver Prices Zip Higher to Trend-line Resistance
- Silver prices rally sharply pre and post-FOMC
- Reach top-side trend-line running back to July
- Not a great spot to initiate a fresh long, but not necessarily a spot to short unless price action willing
We looked at silver from a short to medium-term perspective on Tuesday, then provided a long-term outlook on Wednesday, and today we are back to the short-term. For the macro-perspective, check out yesterday’s commentary – Silver Prices: Macro-techs Point to Bull Market Continuation.
Prior to the FOMC yesterday we were already seeing good buying pressure in silver; the expected hold and hawkish tone of the Fed ignited volatility in the minutes to follow, but ended up seeing the metal higher on the session when all said and done.
The 3%+ rally pushed silver up against the top-side trend-line running back to the July spike high. This makes establishing a fresh long at this juncture a risky prospect in our view – we don’t buy resistance nor sell support. Simple as that. However, just because a market is up against a level doesn’t mean we fade it either, unless there are indications the level(s) in question are rejected and momentum turns back the other way.
For would-be shorts, a turn in momentum may offer an opportunity to see silver back lower into the contracting range. A break above trend resistance would likely prove to be a significant bullish event given the points outlined yesterday, and warrant covering shorts and looking at taking the other side of that trade.
A decline from here would help work towards a more ideal scenario from the standpoint of seeing volatility contract further before expanding and see silver launch higher in line with the longer-term outlook.
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---Written by Paul Robinson, Market Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.