Silver consolidates above a key support ahead of ceasefire deadline; eyes on US-Iran talks
FUNDAMENTAL
OVERVIEW
Silver rallied on Friday
following a barrage of positive news on the US-Iran front. The sentiment turned
bullish on news of a potential deal after Iran announced it would reopen the
Strait of Hormuz.
However, that upward
momentum reversed heading into the weekend. Prices cooled after President Trump
clarified that the US would maintain its blockade of the Strait until a deal
was signed. This prompted traders to hedge their positions into the weekend against
a possible escalation, which proved prescient as Iran reclosed the Strait in
retaliation to the US blockade.
The renewed US-Iran
tensions resulted in a negative gap when markets reopened yesterday. Despite
the positive expectations, the uncertainty is capping silver’s upside.
The price action continues
to be driven almost entirely by US-Iran headlines, which is unlikely to change
until an official resolution is reached.
The downside for now
remains limited by positive expectations for a deal. An official resolution
would likely trigger a rally towards the 90.00 handle. If the ceasefire doesn’t
get extended though and the conflict resumes, silver prices could quickly fall
back into the 60.00 level.
SILVER TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that silver is consolidating above the 78.00 support. The buyers will likely
continue to step in there with a defined risk below the support to keep pushing
into the 96.30 level next. The sellers, on the other hand, will look for a
break lower to pile in for a drop into the major trendline around the 70.00
handle.
SILVER TECHNICAL ANALYSIS –
4 HOUR TIMEFRAME
On the 4 hour chart, we
have an upward trendline adding confluence to the 78.00 support. This should
technically strengthen this support zone and give the buyers more conviction to
position for new highs with limited risk below the trendline. If the price were
to break lower, the sellers will likely extend the pullback into the 72.50
level next.
SILVER TECHNICAL ANALYSIS –
1 HOUR TIMEFRAME
On the 1 hour chart, there’s
not much we can add here as the buyers should step in around these levels with
a defined risk below the trendline, while the sellers will wait for a break to
open the door for new lows. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today we have the US Retail Sales. Tomorrow, we should have the US-Iran talks
in Islamabad. On Thursday, we get the latest US Jobless Claims figures and the
US PMIs. The focus remains on US-Iran headlines ahead of the ceasefire deadline
tomorrow at midnight.
This article was written by Giuseppe Dellamotta at investinglive.com.