Silver once again found support around the long term trendline hence continuing the tight range ahead of some major economic releases including the US monetary policy which is due today. The long term sentiment remains bullish due to Higher Low (HL) in the recent downward wave.
As of this writing, the white metal is being traded near $19.45 an ounce. A support can be seen around $19.31, the trendline, ahead of $18.66, the swing low of the previous wave. A break below the double bottom support area near $18.66 will trigger renewed selling interest, opening doors for the fresh multi-year lows towards the $18.00 handle.
On the upside, the precious metal is likely to face a hurdle near $19.74, the trendline resistance as well as 23.6% fib level. A daily closing above the trendline resistance will push the metal again into bullish territory, opening doors for $20.83, the 50% fib level, ahead of the 22.00 handle that is 76.4% fib level and psychological level as demonstrated in the above chart.
US Monetary Policy
The US Central Bank will announce the Federal Open Market Committee (FOMC) decision on the asset purchase program and overnight lending rate following the two-day monetary policy meeting in Washington. The central bank is expected to trim the stimulus by $10 billion to $45 billion while leave the cash rate unchanged at 0.25%. The tapering decision by the Fed will be seen as bearish for Silver and might accelerate the selling pressure.
Keeping in view the overall macro-economic outlook and recent concerns about the supply of white metal, buying the metal near the $19.00 handle appears to be a good strategy; the long term target might be around $22.00. Not to mention, the current price of silver is less than even its mining cost, keeping the price supported around the current levels.