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Silver - 02/11/2020

Micro Analysis

02 November, 2020

For General Information only. Not Intended to Provide Trading or Investment Advice. Your Capital is at Risk.

MID-TERM TREND: UP

Silver: Overview

  • Silver is expected to behave like Gold in the coming period assuming a safe-haven role. With so much of uncertainty to come in the period ahead, demand for Silver may rise as well as Gold.
  • US PRESIDENTIAL ELECTION (NOVEMBER 3): Fears over contested election (no clear winner) rise which could increase uncertainties in the beginning of November to push investors towards the safe-haven gold and silver. Analysts believe that the most important swing state is Florida, which sees Donald Trump and Joseph Biden close in the polls. The US Presidential and Congressional Election will take place on November 3, and major fears are that on November 4 there will not be still known who the new President of the USA is.
  • EXPECTED MORE US STIMULUS TO DEVALUE THE US DOLLAR, POSITIVELY SUPPORT GOLD: The Trump administration created the Lost Wages Assistance program in early August after a $600 weekly boost in unemployment benefits lapsed in July. The new program, which offered $300 a week for up to six weeks, is nearing its end in many states. The latest development requires more action on the part of the Democrats and Republicans, which could increase chances for them to agree on a new stimulus package after the Presidential Election (November 3, 2020). Talks between the Democrats and the White House are expected to continue after the election and the number they assumed to be negotiating is 1.9 trillion dollars.
  • US FEDERAL RESERVE EXPECTED TO KEEP INTERETS RATES NEAR 0.00% FOR A LONGER TIME-PERIOD: Federal Reserve Chair Jerome Powell unveiled a new approach to setting U.S. monetary policy, letting inflation and employment run higher in a shift that will likely keep interest rates low for years to come. Following a more than yearlong review, Powell said that the Fed will seek inflation that averages 2% over time.
  • SAFE-HEAVEN DEMAND FOR GOLD and SILVER DUE TO COVID-19 TRIGGERED FINANCIAL CRISIS: Gold and Silver could be expected to continue recovering as demand for safe-haven assets remains high, supported by rising financial market uncertainties due to growing number of coronavirus cases worldwide. And more lockdowns looming. The financial markets already started to fear a possible double-dip crisis, as global economic performance in Q3 is expected to be on the edge.

Mid-Term Technical Outlook

  • Silver has continued to recover after dropping recently below the mark of 22.00, when it tested levels below the mark of 21.64.
  • From a technical perspective, Silver could be expected to recover as its Daily Relative Strength Index has recently fallen close to its oversold threshold of 20.
  • Silver has also managed to stay above its 155 Day Exponential Moving average which has been lately acting as the support level.
  • On the upside, Silver could be expected to target Resistance 1 of 25.00 and Resistance 2 of 26.50 in extension. If, however, Silver fails to live up to the above-mentioned technical outlook, it could target Support 1 of 22.520 to the downside.


Graph: (Silver, Daily)

Current Price: 23.750

Silver

Mid-Term

Trend direction

UP

Resistance 3

28.000

Resistance 2

26.500

Resistance 1

25.000

Support 1

22.520

Support 2

21.200

Support 3

20.000

Example of calculation based on trend direction for 1.00 Lot*

SILVER

Pivot Points

Resistance 3

Resistance 2

Resistance 1

Support 1

Support 2

Support 3

Profit or loss in $

42,500.00

27,500.00

12,500.00

-12,300.00

-25,500.00

-37,500.00

Profit or loss in €**

36,482.25

23,606.16

10,730.07

-10,558.39

-21,889.35

-32,190.22

Profit or loss in £**

28,222.62

21,273.96

9,669.98

-9,515.26

-19,726.76

-29,009.95

Profit or loss in C$**

56,495.25

36,555.75

16,616.25

-16,350.39

-33,897.15

-49,848.75

* 1.00 lot is equivalent of 10000 units
** Calculations for exchange rate used as of 12:49 p.m. (GMT) 2/11/2020
Fortrade recommends the use of Stop-Loss and Take-Profit, please speak to your Senior Account Manager regarding their use.
*** You may wish to consider closing your position in profit, even if it is lower than suggested one
**** Trailing stop technique can protect the profit – Ask your Senior Account Manager for more details

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