Silver Prices Trading in the Middle of An Air Pocket
- Silver prices are well below resistance and have room to go before support is met
- Continue to view countertrend moves, consolidations as short opportunities
- Holiday week in the US, liquidity could be lacking, key news events to be aware of
Recently, we’ve been discussing the importance of resistance over 17 and the likelihood of pressure being kept on silver as long as it stays below. On Thursday, we looked at a short-term trend-line as a guide for shaping our trading bias. The t-line broke, leading to more selling on Thursday and Friday.
Silver is sitting near the center of an air pocket. As we have noted on several occasions there is nothing substantial to the left until around 16/15.80. Until support is met, as long as silver stays below the low 17s, the path of least resistance will remain lower.
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Bounces and consolidations are viewed as potential opportunities for shorts to add to existing positions or open new trades. To abandon this view we would need to see a swift turnaround, overtaking resistance levels. This would likely be accompanied by a sharp sell-off in the US dollar, something we don’t view as the most probable scenario at this time.
It’s a holiday week in the U.S., with Thanksgiving on Thursday and many market participants making a short week of it. Keep in mind liquidity can be lacking in this type of environment, which can lead to sharp, nonsensical moves. There are a couple of high impact data events to be aware of: Wednesday, US Durable Goods Orders and more importantly the FOMC minutes from the November 1-2 meeting. On Friday, US Advance Goods Trade Balance is due out. For full details, please see the economic calendar.
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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.