Silver Prices Tumble Today...Threatening Break of 200 DMA

New York (April 7)  There was some volatility in silver prices during the NFP report today but a sharp drop that followed the European close has broken XAG/USD below a rising channel on an hourly chart and has taken it into negative territory for the day.

USD/JPY has shown similar price action after the European close with an abrupt break above a declining trendline that held the pair lower since late March. US equity markets advanced following an initial drop after the US jobs report. The S&P 500 is seen turning back into positive territory and is threatening resistance that has held the index lower for the entire week on a daily basis.

The bulk of the decline in Silver prices took place in two hours and has taken the instrument into negative territory for the day and week. The daily print will be important as prices are currently trading below the 200-period daily moving average which resides at $18.05.

Gold prices have performed better than Silver today but a similar decline has wiped out early day gains as XAU/USD was last seen trading relatively unchanged on the day at $1251 after reaching a high earlier today of $1270.

There has been a small recovery following the momentum driven decline in Silver prices with an attempt to regain the $18.00 handle. The price point is seen as pivotal for a near-term directional bias. In the absence of a recovery back above the level, prices remain at risk for a further decline.

The daily print will be important as there is potential for a bearish engulfing print after eight sessions of consolidation. In the event of a daily close near current levels, rallies in the upcoming week are likely to remain short-lived with the next downside target at $17.71. The level was first respected in May 2015 and has impacted Silver prices on several occasions since.

Source: EconomicCalendar