Silver in short squeeze bounce
Today saw silver rally in excess of 3% on no major news, finding support along with other financial markets that had become under pressure.
Of course, it is not the first time in this bear trend that we have seen such sharp moves higher, only for the bulls to then surrender and bears to take charge and drive prices to new lows. This coulf happen again, as nothing has changed fundamentally to provide lasting support to metal prices.
Bearish speculators will be looking for signs of a bull trap to form here, before potentially stepping in again.
On the hourly, we can see a large bullish candle highlighted. There is no need for price to go below that thrust candle now, if the bulls want higher prices. But if silver does go below the low of that candle, then this will provide the bears with a good indication that the bulls are trapped again.
Specifically, I am talking about the 18.56 level. A potential break below here could triggered a move down to the next support level at around 18.09, before we potentially revisit the September low.
From a macro point of view,the Fed is still very hawkish and likely to raise rates by 75 basis points again at its next meeting. Against this backdrop, zero-yielding gold is likely to remain under pressure despite today’s rebound.
In fact, we saw more reason last week why interest rates could continue to rise aggressively. For one thing, the latest US CPI measure of inflation was stronger than expected, dashing hopes that the Fed would pivot to a more dovish stance. For another, the University of Michigan’s inflation expectations indices, which are forward-looking, suggested that prices pressures are becoming embedded.
Of course, it is not the first time in this bear trend that we have seen such sharp moves higher, only for the bulls to then surrender and bears to take charge and drive prices to new lows. This coulf happen again, as nothing has changed fundamentally to provide lasting support to metal prices.
Bearish speculators will be looking for signs of a bull trap to form here, before potentially stepping in again.
On the hourly, we can see a large bullish candle highlighted. There is no need for price to go below that thrust candle now, if the bulls want higher prices. But if silver does go below the low of that candle, then this will provide the bears with a good indication that the bulls are trapped again.
Specifically, I am talking about the 18.56 level. A potential break below here could triggered a move down to the next support level at around 18.09, before we potentially revisit the September low.
From a macro point of view,the Fed is still very hawkish and likely to raise rates by 75 basis points again at its next meeting. Against this backdrop, zero-yielding gold is likely to remain under pressure despite today’s rebound.
In fact, we saw more reason last week why interest rates could continue to rise aggressively. For one thing, the latest US CPI measure of inflation was stronger than expected, dashing hopes that the Fed would pivot to a more dovish stance. For another, the University of Michigan’s inflation expectations indices, which are forward-looking, suggested that prices pressures are becoming embedded.
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