Silver Trading Down Near 2011 Low

By Fan Yang | May 17, 2012 12:30 AM IST

Silver Technical Update

XAG/USD (Silver) Daily Chart 5/16/2012 1:55PM EDT


Silver has been persistently bearish. Commodity prices, gold and silver have all been in a downtrend as the USD surges in the risk aversion environment in May. The moving averages are in bearish orientation, and the RSI is below 30. This means the market is bearish, but maybe in the short-term is a bit stretched to the downside. Can we expect a pullback?

Note in the weekly chart that as the market approaches 26.10, it is trading near the 2011 low, and an established support pivot during this year and almost half of consolidation (triangle?). However, a break below 26.00 should suggest that the market is in a declining channel. The first target for this break should be 23.00, the 200-week SMA.

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FOMC Minutes are out as I wrap up this article. the FOMC minutes came out

- inflation is controlled
- "Participants identified several downside risks to the projected pace of economic expansion, including the fiscal and financial strains in the euro area and the possibility of an abrupt fiscal consolidation in the United States.".
- no mention of stimulus.

Seems like a non-event at the moment. It is less dovish than the last minutes as well as the BoE inflation report, so the market may need to find another reason to hold off USD-strength, meanwhile, risk aversion should continue to boost the greenback and pressure commodities.

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Fan Yang CMT is a trader, analyst, educator and the Chief Technical Strategist FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources. 
 

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

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