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    IronFX Intraday Comment | Silver | 26/01/2016

    • The dollar traded higher against most of its major counterparts during the European morning Tuesday, in the absence of any major market moving events. It was higher against CHF, JPY, GBP, EUR and NOK in that order, while it traded lower vs CAD, AUD and SEK. The greenback remained virtually unchanged against NZD.

    • Silver jumped to its highest level since early December, as renewed oil market weakness, selloff in Chinese stock markets overnight, and declines in European equity markets added to demand for safe-haven assets. Even though silver is not considered as a safe-haven asset, its strong correlation with gold kept the demand robust for the precious metal. In addition, speculation that on Wednesday the Fed may consider slowing the path of this year’s interest rate hikes given the global market turmoil also boosted demand for silver. As long as the markets are in a risk averse sentiment, we could not rule out further upside potentials. We would be cautious for some consolidation or correction however if the equity markets begin to stabilize.

    • Silver traded higher during the European morning Tuesday, but the advance was rejected slightly above 14.40 (R1) the upper bound of the sideways range the metal has been trading since the 18th of December. As long as the white metal is trading between the aforementioned resistance zone and the key support area of 13.75 (S3), I would consider the near-term outlook to be to the sideways. I would like to see a clear break above the 14.40 (R1) zone before getting more confident on further advances. Such a move is possible to prompt extensions towards our next resistance of 14.60 (R2). Our short-term oscillators detect upside speed and increase the likelihood for a break above 14.40 (R1). The RSI rebounded from its 50 line and is now headed towards 70, while the MACD stands above both its zero and trigger lines, and points north. Moreover, both the indicators lie above their respective upside support lines. Switching to the daily chart, I see that a possible close above 14.40 (R1) would confirm a forthcoming higher high, which could turn the medium-term outlook positive as well. The daily oscillators have already turned positive. This is another sign that silver is possible to continue trading higher in the foreseeable future.

    • Support: 14.20 (S1), 13.95 (S2), 13.75 (S3)

    • Resistance: 14.40 (R1), 14.60 (R2), 14.80 (R3)


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