The Break-Out We Are Waiting For?
Silver has been trading within a wedge for about four years. As we approach the upper end of the resistance range, many traders are wondering if this can be the breakout that we have been waiting for.
What is behind this move?
There are a few potential catalysts that can explain the recent price action observed in March. Silver, similar to Gold, and BTC have seen a “decoupling” of fundamentals. Typically, all of these risk assets are very sensitive to the interest rate environment and macroeconomic momentum. Inflation in the U.S., as observed through CPI and PPI, has recently come in hotter than expected, interest rate cut expectations have been reduced, and the 10-year yield is higher. However, silver prices are also higher.
This could be attributed to an “underpositioning” in commodities. Investment advisors and portfolio managers have begun to add commodities into portfolios, increasing the weighting of real assets. This could also be due to ETF inflows picking up for these metals in March.
China smelters collectively came together and decided to cut production output of copper. Since silver and copper are both used in many industrial applications, this production cut in copper has also boosted silver prices.
Despite recent increases in CPI and PPI, we have observed some softening in the labor market. The uptick in the Unemployment Rate, weaker Average Hourly Earnings, and the massive downward revision to Nonfarm payrolls may be aiding this rally, despite higher yields.
Technicals:
From a technical perspective, if silver can manage to break and close above 25.75, we could see a new bull cycle in the precious and industrial metal.
Check out CME Group real-time data plans available on TradingView here: tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
What is behind this move?
There are a few potential catalysts that can explain the recent price action observed in March. Silver, similar to Gold, and BTC have seen a “decoupling” of fundamentals. Typically, all of these risk assets are very sensitive to the interest rate environment and macroeconomic momentum. Inflation in the U.S., as observed through CPI and PPI, has recently come in hotter than expected, interest rate cut expectations have been reduced, and the 10-year yield is higher. However, silver prices are also higher.
This could be attributed to an “underpositioning” in commodities. Investment advisors and portfolio managers have begun to add commodities into portfolios, increasing the weighting of real assets. This could also be due to ETF inflows picking up for these metals in March.
China smelters collectively came together and decided to cut production output of copper. Since silver and copper are both used in many industrial applications, this production cut in copper has also boosted silver prices.
Despite recent increases in CPI and PPI, we have observed some softening in the labor market. The uptick in the Unemployment Rate, weaker Average Hourly Earnings, and the massive downward revision to Nonfarm payrolls may be aiding this rally, despite higher yields.
Technicals:
From a technical perspective, if silver can manage to break and close above 25.75, we could see a new bull cycle in the precious and industrial metal.
Check out CME Group real-time data plans available on TradingView here: tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.