What’s inside:
- Silver prices in bullish channel, but facing formidable resistance
- Based on recent price action, one side of the market will win-out, and soon
- Dollar support, silver resistance continues to be a theme
In the last silver update, we took a look at the rising channel visible on the 2-hr chart and made note of the lower parallel as key support in the near-term. The line held, silver found a bid with the help of US dollar weakness. The bounce from support took it up to the zone in the 17.20/33 zone the metal has carved out as resistance on the daily chart; this zone runs all the way back to June, so it’s an important one as we are seeing with numerous failed attempts to push through.
Price action is caught between a solid month-long uptrend keeping silver pointed higher and important resistance. This is creating a potentially explosive situation as one side of the market will prevail at some point very soon; based on the wedging action we are seeing a resolution could happen in the next 24-48 hours.
Either resistance will continue to remain formidable and the lower trend-line will eventually break as sellers gain control, or buyers will push silver through to the other side of key resistance and clear a path towards an important intermediate-term trend-line extending lower off the July spike high.
Silver: Daily (2-hr)
Created with Tradingview
The US Dollar Index (DXY) is trying to hold onto the breakout levels around the 2015 peaks, but still remains in a downtrend since peaking on Jan 3. It’s moving nearly step-for-step in the opposite direction of silver, with the 21-day correlation sitting at a strongly negative 90%. It’s been like this for over a week now, silver at key resistance, dollar at key support – something has to give. And likely very soon.
US Dollar Index (DXY): Weekly
Created with Tradingview
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—Written by Paul Robinson, Market Analyst
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