Source: PaxForex Premium Analytics Portal, Fundamental Insight
Equity markets continue to push higher, but traders ignore underlying weakness in employment data from reports other than the NFP. The latest US ISM Non-Manufacturing PMI showed a decrease in hiring, and initial jobless claims had a few upside surprises. Inflationary pressures also remain elevated and have more upside pressures ahead. Global central banks are already behind the curve and risk falling behind further.
Supply chain disruptions out of Asia add to inflationary pressures together with rising commodity prices. Wages also increase, adding dreaded wage-based inflation. Inflation data will likely recede marginally before accelerating, especially with central banks unwilling to acknowledge inflation they helped foster. Traders should not confuse a likely slow summer as the end of the economic problems and monitor data moving forward. Since silver is priced in US Dollars, pending US Dollar weakness ahead can help price action advance.
The forecast for silver remains bullish, especially over the long term. Price action moved below its ascending Ichimoku Kinko Hyo Cloud, but the sell-off lost momentum. While the Tenkan-sen started to ascend, the Kijun-sen extends its slide, which may lead to short-term volatility. The CCI briefly moved into extreme overbought territory before receding with more upside potential ahead. Can bulls take advantage of improving technicals and force silver into its 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 25.900 to 26.550 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 26.150
- Take Profit Zone: 28.250 – 28.700
- Stop Loss Level: 25.500
Should price action for Silver breakdown below 25.900, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 25.500
- Take Profit Zone: 24.300 – 24.650
- Stop Loss Level: 25.900
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