Spot Silver is edging higher early Thursday after posting its fourth straight successful test of the 50-day moving average at $62.81. The main trend is down according to the daily swing chart. For the second time this week, sellers reaffirmed the downtrend with a lower low at $62.31, however, the lack of follow-through pressure may have triggered today’s early short-covering rally.
A trade through $62.31 will once again reaffirm the downtrend. A trade through $68.33 will change the main trend to up.
The minor trend is also down. A trade through the minor top at $64.94 will change the minor trend to up and shift momentum to the upside.
The intermediate range is $54.78 to $71.18. Its retracement zone is $62.98 to $61.04. This week’s lows have all tested this zone successfully. The 50% level at $62.98 forms a support cluster with the 50-day moving average at $62.81. Thursday’s early low is $62.85.
Additional levels to watch include long-term 50% support at $60.835. On the upside, 50% levels at $65.32 and $66.75 are potential resistance.
What to Watch
Warsh answered his question Wednesday. The Fed is still raising rates and still worried about inflation. Now silver has to answer the other one. Can sellers actually break this market with that information? Four tests of the 50-day moving average this week and four failures. A hawkish Fed, a stronger dollar and yields near 5% and the low at $62.31 still held. If buyers keep defending the downside after absorbing all of that, the question stops being whether silver breaks lower and starts being what it would take to knock out the bid entirely.
The bias leans bearish with the main trend down on the daily swing chart and this week’s lower lows reaffirming the direction. The bearish case has a credibility problem though. The 50-day moving average at $62.81 and the retracement zone at $62.98 to $61.04 have stopped every selloff this week including the post-Fed flush to $62.31.
A push through the minor top at $64.94 flips the minor trend to up and puts resistance at $65.32 to $66.75 in play. Overcoming $66.75 gives buyers a clean path toward $68.33 and a trend change. On the downside, a break through $62.31 would finally produce the follow-through sellers have been unable to generate and opens the door to $61.04 and long-term support at $60.835.
More Information in our Economic Calendar.