Silver Mid-term Short OpportunityHello Traders,
Today we would like to present you TVC:SILVER as it seems to decline in near future. Let us break down the analysis.
Starting with the fundamentals/macro overview as usual:
TVC:SILVER is currently not a very much watched instruments in the financial market, however it shows some interesting pattern. These pattern we would like to provide you.
As TVC:SILVER is in our trading watchlist for commodities combined with TVC:GOLD for the precious metals, it may shows some capital outflows coming in near future for mid-term.
After President Trump will talk in front of the congress by 2:00AM gmt in which he may give a statement of his tax reform and budged plan. "World financial markets will be scrutinizing the 9 p.m. address in the House of Representatives for specifics of how the Republican president aims to make good on promises to tackle tax reform, boost infrastructure spending and simplify regulations he says are harming business." (source Reuters) His content of the speech and tone will be important. He says to bring "one of the best tax reforms which the U.S. had in quite a long time."
In addition markets predicts with a probability of 62.0% vs. 31.0% (yesterday) a rate hike of 25 basis points. This may confirm bearish sentiment towards precious metals as we currently see in TVC:GOLD as well, as it forms our well said bearish pattern.
However, keep in mind that the speech by President Trump at 2:00AM gmt could completely change the picture in worst case.
As we look at our intermarket indications we we get confirmed with our statement, as they currently warn for a big upside moves on mid-term. They mention a short-midterm outflow of capital!
We always mention the importance of intermarket flows, as we believe that investors only repark their money due to sentiment and global macro-economic conditions. Therefore, we always keep in mind the in-and outflows with the help of our intermarket indications that lead us towards better timing when making a trading decision. As you might know that timing is one of the most important things when it comes to trading.
As seen in the chart, our two of our intermarket indications showing a divergence and currently moving in selling territory which might indicate a soon outflow of capital towards other asset classes. One of them is currently turning south ( Silver vs. Currencies). We take into regard always the BIG 4: Currencies, Bonds, Stocks and Commodities.
Looking at the technical perspective and current trading range, we see a clear trend channel in where TVC:SILVER currently moves. However, it currently flirts with a decisive zone (our 50% Resistance Level). Around that level it will be decided what trend direction we see next. As market bounced several times at the drawn trend line above that red drawn decisive range, we might see sooner or later trend reversal patterns. Together with all our analysis, this might confirm our standpoint that TVC:SILVER might move to the downside (first turquoise box or further to the second turquoise box) before continuing long term bullish trend. This move may be initiated in the next 0-3 weeks. If we see a bearish pattern we might take advantage of getting at least a 4:1 Risk/Reward out of the trade.
So, summarizing everything together, we believe that TVC:SILVER might fall to the downside at least on mid-term before continuing long term bullish trend. This underlines our intermarket indications that are currently diverging bearish. The fundamental perspective may give Silver a driver to to potential bearish sentiment around the decisive territory as we soon get interesting trading setups.
We wish you much success,
The Secrets2Trade Team
