Silver 1 OZ 999 NY (XAG=X) Remains Stuck in Consolidation
So far, silver is up slightly on the day, advancing $0.035 or 0.20% to $17.72. Strength in the dollar has kept downward pressure on commodity prices in recent weeks, including silver. The U.S. Dollar index (DXY) reached a new trend high today as it moves into its sixth week of an advance.
This week, markets will be watching U.S. Federal Reserve Chairman Jerome Powell’s testimony to Congress on Tuesday and Wednesday for any indication on the future direction of interest rates. Signs of lower rates to come could start putting downward pressure on the dollar, which could be bullish for commodities.
Technically, silver prices remain congested as Friday was an inside day and Monday is currently shaping up to be an inside day. An inside day is reflecting consolidation on a daily basis, where the high to low price range of a day is contained with the price range of the prior day. In this case, depending on where silver closes on Monday, we have two inside days in a row for silver.
Many times, a move out of consolidation can see a pick-up in momentum in the direction of the breakout. Unfortunately, in the case of silver the inside day consolidation candles noted above are contained within a larger descending trend channel consolidation. This needs to be taken into consideration relative to the next move as a three-day breakout could be muted by the larger consolidation pattern.
Breakouts from Consolidation
A breakout of the three day range will occur on a move above the range high of $17.87, while a breakdown happens on a move below the low of the range at $17.57.
On an upside breakout, silver would first need to exceed potential resistance of the descending trend line at the top of the channel, followed by the most recent swing high at $18.08. A daily close above $18.08, followed by a daily close above the $18.33 swing high, confirms strength of the breakout and increases the likelihood of an eventual move above the top of the channel at $18.84.
Downside Price Levels
The $17.47 swing low is key short-term support on the downside, as a drop below it will signal further selling into the lower support zones. First, there is the 78.6% Fibonacci retracement at $17.29, followed by the swing low of the channel at $17.07
Overall, the bias in prices is: Sideways.
The projected upper bound is: 18.36.
The projected lower bound is: 17.16.
The projected closing price is: 17.76.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 31 white candles and 18 black candles for a net of 13 white 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 55.5315. This is not an overbought or oversold reading. The last signal was a buy 19 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 49.82. 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 24 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 -9. This is not a topping or bottoming area. The last signal was a buy 3 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 21 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAG= closed down -0.008 at 17.742. Volume was 85% below average (consolidating) and Bollinger Bands were 35% narrower than normal.
Open High Low Close Volume___
17.754 17.760 17.740 17.742 50
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 17.72 17.59 16.80
Volatility: 20 22 24
Volume: 2,969 594 148
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 5.6% above its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect very strong flows of volume into XAG= (bullish). Our trend forecasting oscillators are currently bearish on XAG= and have had this outlook for the last 9 periods.