Silver (XAG) is currently in a downward trend, with the last completed swing down from $71.56 to $55.60. The current retracement zone at $59.44 to $58.53 is a critical battleground, where traders are either establishing a secondary higher bottom or pushing the market lower. The focus on Friday will be on price action and order flow around this zone, with the buyers' success potentially leading to a higher bottom and upside momentum. However, if the sellers regain control and drive the market through $57.22, momentum will shift to the downside, and $55.60 will be in play.
The July 28-29 FOMC meeting is not the primary concern, as the market has already priced in a hold. The real fight is in September, with the CPI data determining the hike probability. Treasury yields and the dollar will not decrease unless inflation data justify a pause. The rate trade is currently driving silver, and bulls are awaiting a catalyst that has yet to materialize.
The volume is a key factor, with trend traders not requiring high volume to continue the move, but counter-trend buyers needing it. The battle between buyers and sellers in the retracement zone will determine the market's direction, with a higher bottom potentially leading to a higher bottom and upside momentum. However, a breakdown below $57.22 will shift momentum to the downside, and $55.60 will be in focus.
In summary, the silver market is currently in a critical phase, with the retracement zone at $59.44 to $58.53 being the key battleground. Traders are either establishing a secondary higher bottom or pushing the market lower, with the volume and buyers' success determining the market's direction. The FOMC meeting and CPI data are also important factors, with the market's reaction to these events shaping the market's trajectory.
