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Long-Term Analysis of the Silver Market

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Silver

The silver market has once again caught investors’ interest as the price is nearing areas not seen since late 2008.

2017 started at a low point for silver, and it seems it will end the year that way as well, meaning investors who bought at the beginning of the year haven’t suffered nor gained much.

This doesn’t mean, however, that the price hasn’t moved during the year. After the low start of the year, silver quickly tacked on about 18% to a top of $17.50 per ounce.

In terms of fundamentals in the silver market, things look a bit complicated for 2018. There are multiple forces pulling in different directions for the price of silver going forward:

Positives

  • A sharp stock market correction can be expected to occur some time in 2018. Most likely, this will happen sooner rather than later. Stock market crashes always trigger a flight to safety, meaning gold, silver, and quite possibly bitcoin, can benefit.
  • We are seeing signs that inflation may be starting to rise again, although this is not confirmed yet. Rising inflation is always good for precious metals.
  • If the US federal budget deficit widens as a result of the new tax reform, the US dollar may suffer as a consequence. Goldman Sachs put out a note to investors in November 2017 saying that the US debt is “on track” to reach an “unsustainable” level in coming years. Fed Chair Janet Yellen has also said about the US debt that it is “the type of thing that should keep people awake at night.” Rising debt levels creates uncertainty about the economy, which is generally good for gold and silver.

Negatives

  • Central banks around the world seem committed to raise interest rates in 2018. Rising interest rates are bad for precious metals because it would make it more attractive to put money in the bank.
  • The cryptocurrency bull market is on track to continue, diverting attention and capital away from precious metals as a traditional store of value. However, this one is uncertain, as it may also be considered a positive in the way that the rise of cryptocurrencies brings the inflationary and unsustainable nature of fiat currencies into focus.
  • The US dollar may have hit a bottom in 2017 and trade higher compared to other major fiat currencies going into 2018. A stronger dollar is always bad for precious metals, which are priced in dollars.

Silver chart

When looking at the chart, we can see that silver is back down to were it started the year, which coincides with a major support area where it has turned several times in the past few years.

From a technical perspective, silver has been trading in a triangle pattern on the longer-term weekly chart, with the price now trading very near the lower end of the triangle, adding confluence to our bias that silver will trade up from here.

Silver failed to live up to our prediction from early 2017, and is now even trading well below the level from that time.

A low price by any measure combined with two major technical support levels adds confidence to our trade and makes silver a low risk and potentially high reward trade for 2018.

Depending on your own strategy and investment style, you may want to wait for the price to break out from the current triangle pattern it has been trading in for the past year and a half. You would then give up some of the potential return for an even safer trade. After that, major resistance is found around $17.50 and $18, with lots of upside potential if we can finally break through those levels.

Featured image from Pixabay.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.3 stars on average, based on 37 rated postsFredrik Vold is an entrepreneur, financial writer, and technical analysis enthusiast. He has been working and traveling in Asia for several years, and is currently based out of Beijing, China. He closely follows stocks, forex and cryptocurrencies, and is always looking for the next great alternative investment opportunity.




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Analysis

Pre-Market: Trade War Optimism Sparks Another Bounce in Stocks

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Global stocks are markedly higher today before the US open, Donald Trump’s quite aggressive negotiating seem to be paying off, at least with regards to China, as in the wake of the pronounced weakness in Chinese assets, and the notable slowdown in the economy, the country wants to reopen the talks with the US.

Shanghai Composite, 4-Hour Chart Analysis

The Shanghai Composite hit a new bear market low overnight before recovering above support into the close, and the Dollar’s rally also ran into resistance, thanks to the Yuan’s bounce of its fresh 13-month low. Emerging market assets are also somewhat higher today, with the help of the Turkish Lira’s continued bounce, but the segment is still deeply wounded technically, and more pain is almost inevitably ahead, as the negative trends still stand.

 

DAX Index, 4-Hour Chart Analysis

Walmart’s great earnings report also fueled the pre-market rally in US futures, as the retail segment in the largest economy still seems to be doing just fine, despite the global woes. The major US indices are after an orderly looking correction, in stark contrast with their European and Asian peers, which are stuck in broader downtrends or even full-blown bear markets.

Nasdaq, 4-Hour Chart Analysis

Yesterday’s tech selloff, which was triggered by the weak report of Chinese giant Tencent has almost been erased after the better than expected numbers of Cisco restored confidence in the market-leading segment. Nvidia (NVDA) will also report after the market close, and as the earnings season is drawing to a close, we can conclude that corporate profits had a blowout quarter in the US, even as cracks in the global economy appeared.

Momentum is still clearly on the side of the FAANGS and the whole US tech sector even after discounting Facebook’s recent plunge, but should the tightening cycle of the Fed continue to drain liquidity from financial markets and should the rising trend in rates persist, we expect valuations to suddenly matter soon.

Dollar Pulls Back

Dollar Index (DXY), 4-Hour Chart Analysis

The possible resumption of the US-Chinese trade talks sparked a, so far, weak correction, which also due from a technical standpoint, with the EUR/USD pair finding support near $1.13, and with the broader Dollar Index running into resistance near the 97 level. The rally in the reserve currency is no danger by any means, as the break-out is clearly intact, but a deeper pullback would help risk-assets in the coming days.

WTI Crude oil, 4-Hour Chart Analysis

Commodities are slightly higher thanks to the relief rally in emerging markets and the dip in the Dollar, but the previously stronger crude oil is just holding up above the $65 support, while gold is clearly below $1200, and copper couldn’t get back anywhere near yesterday’s break-down level close to $2.70.

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 320 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Analysis

Crypto Update: Market Stabilizes but Bulls Not Out of the Woods

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The cryptocurrency segment looks much better than any time in the last 10 days, as the major coins managed to hold up above the liquidation lows hit on Tuesday. While the bounce stabilized the market, there is still substantial fragility following the steep selloff, and until further bullish moves, traders shouldn’t enter full positions.

That said, finally, there are signs of relative strength among the top coins as correlations are slightly lower, and some of the bearish leaders managed to recapture key resistance levels. Litecoin is trading right at the crucial $56 level, while Monero is above the $90 level, and as we noted before the exhaustion of their downtrend is a positive sign or the whole segment.

XMR/USDT, 4-Hour Chart Analysis

The bounce and the following stability triggered a few upgrades in our trend model after spending almost 1 month in the sell zone, but there are still no majors on a buy signal as the segment-wide downtrend remains intact. Bitcoin remains the strongest coin from a technical perspective, while Ethereum and Ripple, which showed weakness for weeks, are also in better shape, even as they face very strong resistance levels.

ETH/USD, 4-Hour Chart Analysis

Ethereum managed to hold up above the $275-$280 level during the overnight pullback, and now it faces the $300 resistance level again, trying to build on the recent rally. While the short-term downtrend is intact, and the oversold longer-term momentum readings could fuel a rally in the coming weeks, but now the coin is in a structural bear market after the break below $400.

The coin is now neutral from a short-term standpoint, but a move below $275 would point to another test of the lows. Further resistance is ahead at $3335 and $360, while strong long-term support is at $260.

Bitcoin Still Below $6500 as XRP Nears $0.30

BTC/USD, 4-Hour Chart Analysis

Not much has changed for Bitcoin in recent days, but relatively speaking the largest coin showed significant strength. That said, until BTC doesn’t show bullish momentum, traders still shouldn’t enter positions, as the structurally important $5850 level is still not far below the current price level. A move above $6500 would trigger a short-term buy signal, but further strong resistance levels are ahead at $6750 and $7000, while support is still found at $6275 and $6000.

XRP/USDT, 4-Hour Chart Analysis

Ripple and Ethereum are in very similar technical setups, and XRP is also facing strong resistance at $0.30 after finding support overnight near $0.275. After the panicky spike below $0.26, the odds of a durable increased, and should the coin stay above the overnight lows, the coin could avoid another short-term sell signal. While traders should still stay away from entering full positions here, a bottoming process might already be underway.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 320 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Analysis

Ethereum Takes Baby Steps to Recovery as Global Markets Surge 10%

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Following the first serious rebound from the last week’s carnage the global market gained 10% overnight, pushing back through the $200 billion barrier after a brief dip to $190 billion yesterday.

Ethereum Price Recovery

The rebound was not distributed equally, with many of the altcoins which had previously lost the most now benefiting in turn. Ethereum made a strong push in the last twenty-fours as it climbed from a near year-long low of $254.56 up to the current range in the $280’s, where it sits at the time of writing.

The 11% gains for the day sound good, but amount to relatively little in dollar value considering how much the coin lost in recent weeks. At one point during the night ETH climbed to a unit price of $290 – but that’s as far as it could go during this particular twenty-four stretch.

The sudden surge over the last twenty-four hours wasn’t enough to take Ethereum to the £300 mark, although that could be achieved following another 5% growth. The current $284 price per ETH is still one of the lowest witnessed in the last 11 months, so there’s still plenty of scope for investors to jump on board.

Predictably, USDT trades are the most popular today, making up close to 20% of the daily total as a significant portion of ETH becomes un-tethered. Wash-trades, or transaction mining on multiple exchanges once again comes close to equalling the actual recorded daily volume of $1.8 billion.

Global Surge Re-Rearranges Altcoins

While nothing could be termed normal in the crypto world, several coins have returned to their former market cap positions from before the dip. EOS is back in 5th place after temporarily being ousted by Stellar, and Cardano has returned to 8th spot after briefly giving up its place to Tether.

TRON and IOTA are still lingering outside the top ten, with Monero holding strong in the 10th spot previously occupied by TRON, and then IOTA in recent times.

Correlation and Causation

You’ve probably seen the Google Trend charts which show an alignment between ‘cryptocurrency’ Google searches, and the total cryptocurrency market cap. Right now the search volume is as low as it has been since before the surge of 2017 – but that isn’t necessarily an indicator of a lack of interest. It just means that people aren’t typing the word ‘cryptocurrency’ (or Bitcoin, which has an immensely larger search volume) into Google any more.

It says nothing about the number of people checking CoinMarketCap every day, and it doesn’t let you know how many people have suddenly become interested again after seeing prices drop to such long-time lows.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 38 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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