Silver prices are testing downward channel resistance

06 July 2023 160
Silver prices are testing downward channel resistance

Silver prices rose for the last four trading days in a row. It was caused by the weakening of the US dollar in anticipation of the Fed latest June meeting minutes. Its release gave some indication of the US central bank's future actions with regard to monetary policy.

 

According to the CME FedWatch Tool, at the moment the markets estimate the probability of the U.S. central bank's interest rate hike by 25 basis points at the end of this month at the level of 89%.

 

The release of new information on the US economy also had an impact on silver prices. Data released on Monday showed a drop in June's ISM manufacturing PMI. The index fell to the recessionary level of 46. This is lower than the April value of 46.9. At the same time the US Treasury bond yields remained almost unchanged. At the same time real yields remained at 1.630%, based on nominal yields minus inflation, which halted silver's rally.

 

According to analysts, the growing demand for the white metal from the solar energy sector will lead to another shortage of supply this year. However, even such a strong fundamental factor cannot provide adequate support for silver prices in the context of high interest rates around the world.

 

A combination of factors affecting the silver market in opposing ways leads to the fact that prices for the metal do not show a pronounced movement. This dynamic may arise with the publication of new US labor sector data tomorrow at 12:30 GMT. The number of new jobs in the non-farm payrolls sector is expected to decline to 225,000. In this backdrop, the U.S. dollar might lose some ground waiting for the statistics.

 

The silver price is testing the downward channel resistance on the H4 timeframe.

 

In terms of wave analysis, the price is forming the third ascending wave on the H1 timeframe. Breakout of the first wave at the level of 23.10 has already taken place. The price may continue to go up in the short term. 

 

Signal:

 

The short-term outlook for silver is to buy

The target is at the level of 24.15.

Part of the profit should be fixed at the level of 23.45.

A Stop-loss should be placed at the level of 22.60.

The bullish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.

This content is for informational purposes only and is not intended to be investing advice.

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