DY: Silver Prices Holding Support Ahead of US Election
Silver prices down, dollar up on FBI clearing Clinton
Risky proposition to establish positions ahead of tomorrow’s election, even if set-up is appealing
Will revisit once the election has passed
On Friday, we described silver prices as playing a game of ping pong between support and resistance. Which side will win out? So far, silver has managed to hold on to a majority of its recent gains coming out of the multi-week triangle formation, which is constructive but not yet conclusive.
The problem with any near-term set-up– the U.S. presidential election is making it a risky proposition to establish positions beyond a day-trade until we find out who wins and how market participants respond. There have been a few twists and turns recently, with another one coming yesterday when the FBI cleared Hillary Clinton of any crimes in how she handled her email. This came a little over a week after the bureau said it was looking further into the matter since saying there was no criminal wrongdoing back in July. The drama put markets on edge, silver mostly benefiting from it as the US dollar weakened materially over the past week+.
Today, the dollar is up on the Clinton news, putting pressure on precious metals. Silver continues to hold the 18 level around the recaptured January trend-line. We view this as important if silver is to continue its push higher out of the October triangle. The top of the triangle in the 17.70s is our final level of support should 18 not hold. A fall below the 17.70s and the trend lower dating back to July will likely reassert itself.
In the process of silver working mostly sideways in the past few days, price action, as seen on the intra-day time-frame, is working on forming a short-term triangle. It’s not fully developed yet, but it’s getting close. The trigger will be untimely, though, with the election beginning less than 24 hours from now. So, with that in mind, we will let it go and come back after the initial reaction to election results and see where we are. If this were an event of far less significance (i.e. NFPs, FOMC, etc.) we wouldn’t be so cautious in establishing a position if our trade criteria were met, but from where we sit the risk/reward is not worth it at this time.
