Silver stays rangebound above a key trendline as focus shifts to the US NFP report
FUNDAMENTAL
OVERVIEW
Silver has been consolidating above a key trendline since last week as the
hawkish repricing reached a near-term peak. Traders are now waiting for the US
NFP and US CPI reports to pick a direction.
Right now, the market is pricing in a 29% chance of a rate hike in July,
which rises to 65% in September. I’m pretty sure we will need notable upside
surprises in the data to force the Fed to hike already in July. September would
be the preferred month for them as they also release the SEP and the dot plot.
Given the Fed’s focus on inflation, the US CPI will likely be more
important for market pricing unless we get a blockbuster NFP report. In line or
worse than expected data, should lead to a pullback pretty much across the
board, with silver benefiting from some dovish repricing. On the other hand,
upside surprises should keep weighing on the precious metal.
SILVER TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that silver is slowly pulling back into the downward trendline. If the
price gets there, we can expect the sellers to step in with a defined risk
above the trendline to position for a drop into the 45.55 level. The buyers, on
the other hand, will want to see the price breaking higher to increase the
bullish bets into the 71.55 level next.
SILVER TECHNICAL ANALYSIS –
4 HOUR TIMEFRAME
On the 4 hour chart, we can
see price action has been mostly rangebound above the major upward trendline as
the hawkish repricing reached a near-term peak and traders continued to wait
for the key US data release. There’s not much we can add here as the sellers
will have a better risk to reward setup around the downward trendline, while
the buyers will keep on stepping in around the upward trendline or wait for a
break above the downward trendline to increase the bullish bets into new highs.
SILVER TECHNICAL ANALYSIS –
1 HOUR TIMEFRAME
On the 1 hour chart, we can
see the recent price action formed a rising channel that could turn into a bearish
flag if the price breaks below the upward trendline. If we get a spike lower on
a good NFP report, I suspect we might not see a follow through until the US CPI
as traders might want to wait for inflation data to confirm whether an earlier
than expected rate hike could come. On the other hand, if the NFP report comes
in line or even worse than expectations, we will likely see silver extending
the pullback into the downward trendline. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today, we get the US NFP
report and the US Jobless Claims figures.
This article was written by Giuseppe Dellamotta at investinglive.com.