SILVER: Bearish Fundamental & Technical outlook.This is a break down analysis of Silver (XAGUSD) in the aftermath of key U.S manufacturing news.
Fundamental Analysis:
- The ISM Manufacturing PMI rose yesterday to 50.9 in January, up from 47.2 a month earlier, marking the first expansion reading since July. This improved risk appetite and is applying selling pressure on Silver. The U.S. manufacturing sector has been kept low for months as the U.S. China trade war unfolded but the phase one deal prompts investors for even stronger manufacturing readings this year.
- Based on the last 12 ISM Manufacturing PMI reports, Silver followed the statistics that gave a 66.7% probability to go lower on the 4H and 12H timeframe if the Actual reading was higher (>) that the forecast. The prediction is equal (66.7% probability to go lower) on a 2 day time frame as well.
Technical Analysis:
- The pattern is a Channel Down in the last 30 days.
- The Resistance is set at 18.115 and the Support at 17.350.
- Death Cross (MA50 crossing below the MA200) formed on the 4H chart.
- The MACD remains bearish with no sign yet to turn, following the Lower High on the Channel Down yesterday.
The above mix indicates that Silver is bearish both fundamentally (strong manufacturing numbers = lower Silver price) and technically (Channel Down). The last two declines after a Lower High were around -5.30% and we expect Silver to fulfil this sequence in the coming days.
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