Silver prices are slowly edging higher as gold prices breach Friday’s high of $1097. This may lift silver to the upper end of its $13.61 to $14.40 range. Range traders would use such a rally to book profits on long positions bought near the $13.75 support level.
I highlighted recently that some range traders might short near $14.25 with stops above $14.40. Yet caution is warranted, because if it was down to gold prices exclusively, a regression model (based on daily prices over the last 6 months)suggests that silver should be trading at $14.53 (currently at $14.10). In other words, silver may break the $14.40 level.
On a break to $14.40 prices may reach the December 7, 2015 high of $14.62.
Bearish traders will wait for a break to the December low of $13.61 and then aim for $13.48 and $13.18. While the aggressive bearish traders may still short near $14.25 with stops above $14.40.
U.S. CPI is on tap today. This may trigger a move in silver. Higher than expected outcomes may rise expectations of Fed rate hikes. According to overnight-index-swaps the market is only expecting a rise of 25bps over the next 12 months. I see this as too low. Headline inflation is expected to print 0.8% MoM, while Core CPI is expected to print 2.1% YoY (BBG).
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Silver Prices | FXCM: XAG/USD
Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano
--- Written by Alejandro Zambrano, Market Analyst for DailyFX.com
Contact and follow Alejandro on Twitter: @AlexFX00
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