- Silver prices still in 'dead-cat bounce' mode
- Keep an eye on the DXY as it tries to hold support
- A lot of work needed to turn the bias upward, a clean break below 17.11 would indicate correction is over
In Monday's post, we described the inability for silver prices to rally as a 'dead-cat bounce'. Since then, we are seeing a little upside in precious metals, but still nothing to get excited about. The US dollar has been a bit on the weak side (looking like consolidation as of now), which is helping provide a bid, but until we see true dollar weakness there isn't much expectation for silver prices to advance with any real power. Keep an eye on the ~97.50 level in DXY (July peak, recent lows) for indications as to whether the dollar will continue to consolidate before moving higher, or break lower.
Putting the dollar to the side, silver has a lot of resistance to contend with before it can be considered in the clear for a move higher. It's presently attempting to trade above the lower parallel we have been discussing. Even if it does cross beyond the first hurdle it won't be long before it's in a horizontal zone of resistance running back to last year, in addition to retesting the January trend-line it broke earlier in the month. All of these technical events arrive at a high point of ~18.
The 10/14 swing low could be a higher low situation from the 10/7 swing low, but, again, silver has its work cut out with levels coinciding above.
So what do we do for now? A turn lower from the resistance zone would help along the notion that silver is simply correcting the early fall decline and not working on forming a bottom. A clean break below 17.11 would indicate the correction is over, and with little price action in the way to the left we would be looking for a drop towards the next area of support around 16.
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