KEY POINTS:
- All eyes on the Fed's decision today
- More hawkish than expected decision is likely to trigger a selloff
- More dovish than expected one should support silver further
- Key near-term support around the 59.00 level
FUNDAMENTAL OVERVIEW
Silver continues to break records as Fed rate cut bets after Fed's Williams comments on November 21 pushed the precious metal to new all-time highs. The market might have gotten a bit overstretched though, and that increases the risk of an aggressive selloff in case the Fed today were to come out more hawkish than expected.
The FOMC is expected to deliver a "hawkish cut" today. In fact, the consensus sees the central bank to signal a pause and communicate that the bar for more rate cuts will now be higher. That won't be surprising, so it shouldn't really scare the market.
Traders will be looking for deviations from the expectations. A more hawkish than expected Fed will likely lead to an aggressive selloff in silver, possibly even taking it back to the 55.00 level in short order. On the other hand, a more dovish than expected decision should give further boost to the precious metal.
There are several potential surprises though that could trigger much stronger reactions in the markets and you can read more about it here.
SILVER TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that after breaking the previous all-time highs around the 54.46 level, silver extended the gains as more buyers piled in and increased the momentum. From a risk management perspective, the buyers will have a better risk to reward setup around the previous all-time high and/or the upward trendline.
If we get a pullback into those levels, we can expect the buyers to step in to position for a rally into a new all-time high. The sellers, on the other hand, will look for downside breaks to regain control and push into new lows.
SILVER TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can see that we have a minor upward trendline defining the bullish momentum and a clear support zone around the 59.00 level. If we get a pullback, we can expect the buyers to step in there with a defined risk below the trendline to keep pushing into new highs. The sellers, on the other hand, will look for a break lower to pile in for a deeper pullback into the 54.46 level next.
SILVER TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, there’s not much else we can add here as the buyers will have a better risk to reward setup around the 59.00 support, while the sellers should wait for a break below the trendline to gain more conviction for the downside. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today we have the Fed’s decision.
