Silver prices continued to consolidate, moving in a very tight range forming a bear flag continuation pattern. The dollar also moved sideways forming a doji day which is a sign of indecision. U.S. Treasury yields moved higher, which capped the upward movement in the precious metals complex. For the week silver prices were able to rebound slightly rising 0.93% after falling 7.6% in the prior week.

Technical Analysis

Silver prices moved higher again finishing closer to the lows after testing higher levels during the trading session. The sideways price action is forming a bear flag pattern. This type of pattern is a pause that refreshes lower. Support near an upward sloping trend line that comes in near 25.17. Resistance is seen near the 10-day moving average at 26.37. The 10-day moving average is poised to cross below the 100-day moving average which means that a short-term downward trend is in place. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The fast stochastic is also printing a reading of 17, below the oversold trigger level of 20 which could foreshadow a correction. Medium-term momentum is negative as the MACD (moving average convergence divergence) histogram is printing in the red but the trajectory is positive which points to consolidation.

Consumer Spending was Flat

According to the Commerce Department, consumer spending was in May, versus the estimate for a 0.4% increase. Additionally, personal income declined 2%, less than the expected 2.7% decline. The Commerce Department reported that the Personal Consumption Expenditures came in at 3.4% year over year. The core PCE index rose 0.5% for the month, which actually was below the 0.6% estimate. Including volatile food and energy prices, the PCE index rose 3.9% for year over year.

This article was originally posted on FX Empire


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