Silver 1 OZ 999 NY (XAG=X) Solid Nonfarm Payrolls Boost Risk Appetite
An excellent U.S. nonfarm payrolls report on Friday triggered a sharp drop of 2.3% in silver prices. The economy added a whopping 266 thousand jobs in November, crushing the estimate of 181 thousand. As well, the 3-month average payroll number increased from 189K to 205K. Still, traders should take these rosy numbers with a grain of salt, as the recent strike at General Motors caused unusually low nonfarm payrolls readings, and the November spike was largely due to the fact that all striking GM employees were back at work. The markets, however, were focused on the strong numbers, which raised risk appetite and sent precious metals lower. Gold prices also slipped on Friday, falling by 1 percent.
Ahead – Consumer Data, Fed Rate Decision
This week will be busy on the fundamental front, and that could translate into significant movement from silver. On Wednesday, the U.S. releases CPI and the Federal Reserve releases its monthly rate decision. On Friday, we’ll get a look at retail sales.
Silver Technical Analysis
Silver has been hovering close to the 16.90 since mid-November, but broke below this line on Friday, with sharp losses. This has put support at 16.50 under strong pressure. This line has held firm since August, so it would be a significant development if this line breaks. If this occurs, the symbolic round number of 16.00 would be vulnerable. This line was last tested in early August. The 50-EMA line remains relevant and is touching the candlesticks at 16.56. As well, the 200-EMA is showing resistance at 17.21.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
The projected upper bound is: 17.12.
The projected lower bound is: 16.01.
The projected closing price is: 16.57.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black candles.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 15.1589. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 11 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 38.04. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 67 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -225.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 18 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 1 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAG= closed up 0.014 at 16.573. Volume was 8,900% above average (trending) and Bollinger Bands were 61% narrower than normal.
Open High Low Close Volume___
16.550 16.683 16.505 16.573 49,333
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 16.89 17.32 16.23
Volatility: 23 20 24
Volume: 4,933 987 247
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
PREC.M.XAG= is currently 2.1% above its 200-period moving average and is in an downward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect very strong flows of volume out of XAG= (bearish). Our trend forecasting oscillators are currently bearish on XAG= and have had this outlook for the last 21 periods.