Silver’s Head and Shoulders Pattern in Play
Silver often rises around the turn of the year and a strong reversal pattern is now in place on the daily chart. If the ultra dovish Brainard is appointed to the Fed then that could be a huge tailwind for silver as it will mean the Fed is even slower on policy normalisation. We should find out in a few days whether Brainard has been successful. If Inflation expectations keep rising, but the Fed keep stating that they will be patient on rate hikes then that could mean real yields keep falling. If the USD and real yields both start dropping together then expect silver to keep lifting higher.
Here is the seasonal pattern for silver. Over the last 25 years, silver has risen 20 times between November 18 and February 18. The average gain has been +8.58%. The largest gain was +49.61%. The largest loss was -12.75%. There is never any guarantee that this seasonal pattern will repeat again this year. However, it is very helpful to notice when these strong seasonal patterns are in place.
❗️ Major Trade Risks: The main risk to this seasonal pattern would be if the Fed respond to rising inflation by bringing forward interest rate hikes more quickly than is currently anticipated.
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