Silver punched across the symbolic 18.00 level on December 31st, but has since retreated. Will the metal try to break this resilient line before the end of the week?
Silver prices are trading sideways in Thursday trade. Currently, silver is trading at $17.88, up $0.04 or 0.20% on the day.
Silver recorded solid gains last week, climbing 3.3 percent. The upward swing has continued this week, with gains of close to one percent. For the month of December, silver was up an impressive 4.8 percent.
So what’s wrong with this picture?
Although silver posted strong gains in late December, it is clearly having trouble making headway above the 18.00 level, which has psychological significance. Silver pushed as high as 18.14 on December 31st but was unable to consolidate these gains, as the metal retracted and ended the year below at 17.82. Will silver make another attempt to break the resilient level? Or will investors look elsewhere and send silver prices lower?
With markets still marked by thin volumes this week, traders should act with caution. The current environment is more favorable for short-term traders, who are comfortable with entering and exiting the market quickly.
The New Year’s holiday has caused a shift in the calendar, so Friday will be somewhat busy, although trade volume is likely to be light. Manufacturing PMI is expected to accelerate, with an estimate of 49.0 December, up from 48.1 pts in November. Still, the manufacturing sector has looked weak, as the PMI has not pointed to expansion since July. We’ll get a look at the FOMC minutes from the December policy meeting, when rate-setters stayed on the sidelines and maintained the benchmark rate.
The recent uptrend was followed by a shooting star, which could signal a reversal. On the downside, we find support at 17.50, followed closely by the 50-EMA line at 17.30. On the upside, there is resistance at the round number of 18.00, followed by resistance at 18.60.
Kenny is an experienced market analyst, with a focus on fundamental analysis. Kenny has over 15 years of experience across a broad range of markets and assets –forex, indices and commodities.
