Talking Points

  • The short-term trend remains bullish above the April 13 low of $16.02, while yesterday’s high of $17.25 is a near-term resistance level.
  • One of the factors cited as supporting silver prices while gold has remained trapped to its range of around two months, is relative positioning between silver and gold.
  • U.S. Existing Homes Sales are on deck today and expected to rise by 3.9% MoM from -7.1% in February.

The short-term trend remains bullish above the April 13 low of $16.02, which is the most recent swing low and is higher than the April 12 swing low of $15.82.

Potential support levels dictated by the Fibonacci retracement tool are $16.78 (38.2% pullback), $16.64 (50% pullback) and $16.49 (61.8% pullback). These levels are derived using the April 13 low of $16.02 and yesterday’s high of $17.25 as reference points.

We do note that the $16.64 level, which constitutes a 50% pullback, is not actually a Fibonacci level, even though most Fibonacci retracement tools provide it and technical traders highlight it as being important.

Yesterday’s high of $17.25 is a near-term resistance level, followed by the psychological level of $17.50 and the May high of $17.80. Over the last few days, we have been highlighting the May high as the next major resistance level beyond the critical October high of $16.38.

One of the factors cited as being supportive of silver prices while gold remains trapped to its range of almost two months, is the relative positioning between silver and gold. The second chart below shows how silver has been performing vs. gold since 1998. When the ratio rises, gold outperforms silver, while a decline indicates that silver prices are gaining vs. gold prices. As seen below, the ratio reached close to both 2003 and 2008 highs and has since then given back gains.

U.S. Existing Homes Sales are on deck today and expected to rise by 3.9% MoM from -7.1% in February. The outcome may affect silver via the USD. A stronger than 3.9% Existing Home Sales rise may lend the USD support, whilst a lower than 3.9% outcome is likely to weaken it.

Silver Price | FXCM: XAG/USD

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Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano

Silver/Gold Ratio

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Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano

— Written by Alejandro Zambrano, Market Analyst for DailyFX.com

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