Silver markets have been rather choppy as of late, but this is much better than what we has seen previously. The Federal Reserve looking to step away and start cutting interest rates at the end of the month of course will put a little bit of negative pressure on the US dollar, but quite frankly there are a lot of questions around why the Federal Reserve is looking to do this.
The general consensus is that it is a safety cut, meaning that they are doing it proactively. Either way, this will play out in the precious metals markets. While gold certainly catches most of the headlines, the reality is that silver markets can be dragged right along with gold, and if you’re a futures trader you know that the contracts much bigger for silver.
It is because of this I actually prefer to trade the silver market, because it tends to move in a much more measured steps. This is probably because I come from a swing trade background, and that’s what I see in silver right now, the potential for swing trading. On the chart, you can see that I have the 20 EMA on the hourly timeframe, as it has been somewhat reliable as of late, but more importantly we have an obvious support and resistance area to pay attention to.
The $15.00 level is a large, round, psychologically significant barrier that will continue to lift the market. In fact, there was a gap there formed a couple of weeks ago that has now been filled. To the upside, we have the $15.50 level that has offered resistance. I believe that we are going to continue to bounce around in this area while we wait to see what the Federal Reserve has to say about future rate cuts. Currently, the “POC” or “point of control” as far as the volume is concerned over the last month is trading at roughly $15.27. In other words, it’s right smack dab in the middle of this two levels. I believe at this point, silver will offer plenty of nice trading opportunities at both barriers, so while we are in the middle of this range, I keep this chart up on my monitor to look for trades.
I do prefer the upside, and I am a bit more aggressive on pullbacks show signs of support between the $15.00 level and the $15.10 handle. In fact, my trades are roughly twice the size on those pullbacks. If we can break above the $15.50 level, then from a longer-term standpoint it opens up the possibility of the $16.00 level which has been a longer-term target of mine for a while. All things being equal, I do believe Silver rallies, but we presently await more signs of dovish and this of the Federal Reserve. Are they going to cut just 25 basis points, or 50 in July? More importantly, are they going to keep cutting? That could very well determine where we go longer-term.