Commodities

Silver continues to trade in a range; will there be first-mover advantage?

Silver continues to trade within the 23-25 well-observed range, contrary to gold’s fiery performance. This balance between buyers and sellers is reflected in the momentum indicators as both the Average Directional Movement Index (ADX) and RSI are mostly pointing to a trendless market. The stochastic oscillator is trying to stir the pot, but it needs a more decisive move to help draw meaningful conclusions.

In range-trading periods, the focus turns to “secondary” signals. In more detail, the convergence of the 100- and 200-day simple moving averages (SMAs) and the narrower Bollinger bands potentially point to an imminent move. The direction is unknown, but the rectangle pattern could offer some clues. This type of pattern favours upward breakouts, but it also experiences a high percentage of failed breakouts.

Should the bulls feel more confident, their initial target could come at the January 3 high of 24.53. The 24.69-24.81 area could then trouble the bulls, ahead of the November 15, 2021 high of 25.39.

On the other hand, the bears could face an initial obstacle at the 61.8% Fibonacci retracement of March 8 – September 1 downtrend of 23.35. Upon successfully breaking this level, they could be faced with the busier 22.24-22.82 area, crowded by the 50-day SMA, the November 15 and June 6 highs, and the 50% Fibonacci retracement.

To conclude, the present calm in the market points to an imminent “storm” with evidence slightly favouring the bulls at this juncture.

About the author

Melina Deltas

Melina joined XM in December 2017 as an Investment Analyst in the Research department. She can clearly communicate market action, particularly technical and chart pattern setups. Her technically focused method looks mainly at price action across multiple time frames to capture big moves that develop over the years. She has more than 3 years of experience in analyzing financial markets, specializing in forex, indices, and commodities. Melina studied Pure Mathematics at Lancaster University and has a Master's Degree in Monetary and Financial Economics from the University of Cyprus. Currently, she is an associate member of the Society of Technical Analysts (STA) and a Certified Financial Technician (CFTe).