Silver prices are quiet on Wednesday morning to begin the trading day. The silver market is trying to hold onto the $19 level, but may be fighting a losing battle. The silver market is in a clear downtrend and has been making consistently lower lows. A test of the $18.80 level, the lows reached back in June, appears to be in store. The fact is that silver is in the midst of a descending triangle on the longer-term charts. What does this mean? The descending triangle is a bearish formation and could potentially indicate further downside. In the case of silver, should silver prices decidedly break down below the $18 or so level, then the pattern will be completed. This could potentially set the stage for $15 per ounce silver.
The silver market continues to lack any significant bullish inputs. Thus far, the Ukrainian/Russian cease-fire is holding up. There are reports of Russian troops having pulled back from the border and overall it seems that a sort of calm has set in. The world has not seen any other new developments in other ongoing conflicts this week, and that lack of news is likely fueling risk appetites. Stocks appear to be consolidating here a bit but another run higher is certainly a possibility, especially in light of what seems to be decreasing headline risk.
The big story for silver investors right now would seem to be the ongoing rally in the dollar index as the U.S. economy continues to show signs of improvement. The dollar has rallied sharply in recent weeks following an upside technical breakout. Strength in the dollar is being seen on an improving economic outlook, the notion of higher interest rates and the struggles that continue to be faced by the Euro zone. The Euro zone has cut rates again recently and unleashed another round of stimulus in order to try and fight deflation. This has caused weakness in the Euro currency, strength in the dollar and in turn likely contributed to weakness in silver, gold and other dollar denominated currencies.
This is a fairly light week from a data standpoint. Next week, however, investors will get plenty of data to chew on. In addition to a large amount of economic data, investors are also looking forward to the FOMC meeting announcement next week. This meeting will be followed by a press conference with Fed Chairwoman Janet Yellen. Ms. Yellen could potentially give greater color on the Fed’s plans for raising interest rates and their outlook on economic activity. Needless to say, this could potentially have an impact on several markets including stocks, the dollar and precious metals.