Potential signal
- If the silver market pulls back to $72.50, and the 10-year yield is falling, I am buying with a stop just under $70, and a target of $79.
Silver has been pretty positive during the trading session here on Thursday as interest rates have fallen a bit and that of course is a very bullish effect on the markets as silver is a non-yielding asset so of course higher interest rates are pretty toxic for silver. That being said, I think you’ve got a situation where a lot of traders are just simply trying to figure out what to do next and they can often use the 10-year yield as a bit of a potential signal.
If the yield starts to drop below the 4.30% level, then silver probably takes off. I do look at $70 as a major support level. The question at this point is whether or not that holds. So far, I think it does. I haven’t really seen anything that makes me worry about it too much. When I say $70, I don’t necessarily mean on the dot, but that general area seems to be bringing in buyers.
Yield Signals and Entry Strategies
If we can get rates dropping from here, then I think we go looking to the 50-day EMA. Looking at shorter-term charts, you start to see a picture of perhaps interest right around $72.50. So that’s where I might enter. $72.50 with falling rates in the 10-year yield in America probably going to be the play I look to take advantage of assuming that it does in fact happen.
If not, that’s fine, I can take my time and not worry about things. I do believe that eventually we have to make a bigger decision, but I also recognize that things will be very noisy in the short term. Therefore, position sizing will be crucial. You cannot get over-leveraged here and take out a massive position very safely.
I am aiming for the 50-day EMA on that pullback and then eventually the $80 level. If we break down below $70 and rates continue to rise, silver has much further to fall.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.