What’s inside:

  • Fed raises 25 bps, a bit more hawkish than expected
  • Silver prices react strongly lower from resistance
  • Rejection at resistance and break of channel/bear-flag sends silver towards target

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Yesterday, the Fed raised rates by 25 bps as expected and provided guidance for three hikes in 2017 via the ‘dot plot’. (They anticipated four heading into this year, we got two, so we’ll see…) In any event, the overall tone was a bit more hawkish than the market expected, resulting in a strong move higher in the US dollar (DXY) and push lower in precious metals.

In the days leading up to yesterday’s late-day sell-off, silver had been stubbornly trying to trade higher, but kept finding sellers over the 17 mark we’ve been honed in on as resistance. Post-FOMC, silver turned sharply lower from resistance, putting in a bearish key reversal bar. The channel (bear-flag) we discussed on Monday was triggered in overnight trade with a breach of the lower parallel. The combination of a powerful reversal bar and break of the underside parallel is leading silver strongly lower.

We have maintained a bearish bias in silver despite its recent strength amid gold weakness and dollar strength. The target at support we had set awhile back in the 16/15.80 area looks poised to finally get thoroughly tested soon, if not broken. How price reacts around this key zone will be a big tell. Gold not long ago dropped right through a big zone of support in the 1200/1190 range without even pausing. It’s quite a bit lower now, will the same happen with silver?

Silver: Daily(4-hr)

Silver Prices Cratering (Finally)

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---Written by Paul Robinson, Market Analyst

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