Silver Market Flirting With The Bears
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Before I get into details, I want to be clear that I am a long-term believer in silver and over time a tsunami of bullish fundamentals will hit the silver market. I have always felt that supplies are limited, demand is increasing, a massive short seller will cover and technological as well as medical uses are on the rise.
Despite these bullish fundamentals one must pay attention to the short-term ripples that impact markets, while monitoring the technicals. Currently soft U.S. and European data coupled with escalating Brexit fears have led to a stronger dollar which have pumped the breaks on the recent rally. Something else to keep an eye on are ETF holdings. We have seen gold ETF holdings reach the highest level since July 2018 while silver ETF holdings have declined to the lowest level since April 2017.
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Silver Price Chart
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Analysis and Outlook
The daily March silver chart is flashing caution because of the sliding 200 DMA and the close proximity of the futures prices. We are seeing Stochastics correct from over bought territory and the MACD starting to roll over. The average true range is consolidating at 20 cents leaving silver to face a larger that anticipated correction when it comes. ADX which measures the strength of the trend has flattened out and that means the upward trend is weakening. If we see a close below the 200 DMA and the next session gapping lower, this could be your trigger that the correction is starting and washout to $15 could happen while a push back from here up to $16 and close above that resumes the upward trend completely nullifies my hypothesis.
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