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Silver Prices Attempt Largest 3 Day Gain in 9 Months

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Talking Points

-Bond yields are dropping producing a good environment for silver prices

-A close above $19.45 creates the largest 3 day gain since October 2015

-Risk can be set near May 2 high of $18.04

Silver prices are trying to produce its largest 3 day gain since October 2015. The technical patterns point to even higher prices, especially if we close on the highs today.

Silver prices are enjoying this environment of interest rate compression. Said another way, a falling US 10 year and 30 year yield makes silver and gold more attractive as they don’t pay any yield.

During this 3 day spike higher, silver price has surprised to the upside breaking through significant horizontal resistance my colleague Paul Robinson previously identified near $18-$19. This break above suggests more bullish potential.

Silver Prices Attempt Largest 3 Day Gain in 9 Months

Currently, silver prices are processing through an equal wave measurement (listed as the 1.000 level near 19.016 on the chart). This potential equal wave pattern may abate some gains, if only for the shorter term. Additionally, since this is a Friday of a very strong week up trend, we may see profit takers stepping in towards the close of the day so it is not an ideal long position at the moment. However, if these profit takers do not step in suggesting they are comfortable holding over the holiday weekend, then a continuation of the uptrend is the higher probability move.

Much above $19.33 (Equal Wave Pattern Extreme on the chart) and the equal wave pattern is stressed and we can set our sights on the next level of measured resistance near $21.05-21.50. Risk to the immediate bullish outlook can be placed near the May 2 swing high of $18.04. A move below that level creates overlap and begins to negate the impulsive look of the XAG/USD chart, which is a CFD that tracks silver.

In summary, a close today above $19.45 produces the largest 3 day gain over the past 9 months. That would also place silver on a Friday high going into a holiday weekend, which is bullish. Lastly, a close today above $19.45 places the metal on the outer bounds of the equal wave pattern. If that equal wave pattern breaks, then it increases the probability of a move up to $21.05-$21.50.

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—Written by Jeremy Wagner, Head Trading Instructor, DailyFX EDU

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EURUSD Weekly Technical Analysis: New Month, More Weakness

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What’s inside:

  • EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
  • Resistance in vicinity of 11825/80 likely to keep a lid on further strength
  • Targeting the low to mid-11600s with more selling

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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.

Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.

Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).

Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.

For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.

EURUSD: Daily

EURUSD Weekly Technical Analysis: New Month, More Weakness

—Written by Paul Robinson, Market Analyst

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You can follow Paul on Twitter at@PaulRobinonFX.

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Euro Bias Mixed Heading into October, Q4’17

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Euro Bias Mixed Heading into October, Q4'17

Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.

EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

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British Pound Reversal Potential Persists Heading into New Quarter

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British Pound Reversal Potential Persists Heading into New Quarter

Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.

GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form

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