Source: PaxForex Premium Analytics Portal, Fundamental Insight
Inflationary pressures remain elevated, as evident in last week’s PPI data out of the US. Supply chain disruptions and port delays will continue to keep costs high for producers, which will filter through to CPI data. The US Dollar came under pressure after dismal confidence data out of the US, which dropped to a decade low. Since silver and other commodities remain priced in US Dollars, it provided a boost to price action. The delta variant of the Covid-19 pandemic is likely to depress economic data for the rest of 2021, adding another bullish factor for gold and silver.
Geopolitical tensions, especially out of Afghanistan, might not contribute on a stand-alone basis, but once added to the mix of issues for the global economy, they add their weight. Equity and cryptocurrency markets ran away over the past month, and traders should prepare for a correction. A sell-off can further raise the price of precious metals, and silver has the most to recover. Chinese economic data also disappointed this morning, a trend likely to be repeated around the world.
The forecast for silver is slowly turning bullish following its flash crash last Monday. After the Tenkan-sen and the Kijun-sen turned sideways, selling pressure eased. Adding to a positive outlook is the Ichimoku Kinko Hyo Cloud, which shows signs of bullishness with the Senkou Span A starting to ascend. Traders should expect more volatility ahead, but the CCI already accelerated out of extreme oversold territory and has more upside potential. Can bulls gather enough power to force silver into its awaiting horizontal resistance area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for Silver remain inside the or breakout above the 23.100 to 24.100 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 23.500
- Take Profit Zone: 26.500 – 27.100
- Stop Loss Level: 22.100
Should price action for Silver breakdown below 23.100, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 22.100
- Take Profit Zone: 20.000 – 20.850
- Stop Loss Level: 23.100
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