Silver 1 OZ 999 NY (XAG=X) Shows No Signs Of Weakness
Silver remained in a range between the 20 EMA near $15.00 and the 50 EMA at $15.60 while global markets turned red amid rapid downside move in crude oil prices.
Currently, the precious metal segment is ignoring the broader sell-off which is a good sign for silver and gold bulls. Both silver and gold are gaining ground despite the risk-off mode in the global markets.
The U.S. Dollar Index, which measures the strength of the American currency against a broad basket of currencies, is also little changed and continues to settle near the 100 level.
The absence of additional pressure from the U.S. dollar is positive for silver. The U.S. dollar is serving as a safe haven asset of last resort during the current crisis, and its strength makes silver more expensive for buyers who have other currencies.
It remains to be seen whether silver will also act as a safe haven asset in case today’s sell-off turns into something bigger. There’s plenty of economic data to digest this week, starting from U.S. Existing Home Sales which are set to be published on Tuesday, April 21, so the markets will likely be volatile.
Previously, general market weakness pushed silver lower since industrial demand is an important component of demand for silver. However, investment demand at times of unprecedented monetary stimulus may help silver hang on to current levels even if financial markets experience another downside move.
Shayne Heffernan Trade Idea
“The longer-term outlook for silver remains bright though given the current environment but near-term softness may continue for now.” Shayne Heffernan PhD in Economics
Why This Matters
Gold and silver futures prices are trading solidly up in midday U.S. trading Monday. The feature in trading today is an extremely sharp drop of over 50% in crude oil futures prices—in just one day. Nymex crude oil futures hit an all-time low of $8.79 a barrel today. Just two months ago Nymex crude prices were above $60.00.
North American storage facilities are full and there is no place to put new production, amid the huge drop in gasoline demand that has resulted in prices at the U.S. pump going for less than $1.00 a gallon at some locations. For the precious metals the slumping oil market is a mixed bag. It’s bullish from the sense of making for safe-haven demand amid a very anxious marketplace with crude prices tanking—especially on a near-term basis.
However, it’s bearish from the sense of crude oil being the leader of the raw commodity sector and its price being in a free fall. It would be especially bearish for metals if oil prices remained at such low levels for more than a few weeks, which appears unlikely, given that June Nymex futures (the next contract out from May futures) are trading at $22.75 a barrel. June gold futures were last up $12.50 an ounce at $1,711.20. May Comex silver prices were last up $0.325 at $15.61 an ounce.
Overall, the bias in prices is: Downwards.
The projected upper bound is: 16.59.
The projected lower bound is: 13.75.
The projected closing price is: 15.17.
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 27 white candles and 23 black candles for a net of 4 white candles.
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 28.8142. This is not an overbought or oversold reading. The last signal was a sell 3 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 50.68. 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 buy 20 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 19. This is not a topping or bottoming area. The last signal was a sell 4 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 buy 18 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAG= closed down -0.151 at 15.219. Volume was 8,900% above average (trending) and Bollinger Bands were 16% narrower than normal.
Open High Low Close Volume 15.292 15.320 15.110 15.219 8,409
Technical Outlook Short Term: Neutral Intermediate Term: Bullish Long Term: Bearish
Moving Averages: 10-period 50-period 200-period Close: 15.39 15.75 17.02 Volatility: 34 62 39 Volume: 841 168 42
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 10.6% below its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect very strong flows of volume out of XAG= (bearish). Our trend forecasting oscillators are currently bullish on XAG= and have had this outlook for the last 7 periods.
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