US political turmoil has been a massive driver for market movements as of late, and even US data has been getting a second look over the current Trump administration antics. Comments from the Trump administration and the closing of the manufacturing council today have once again cast a rather dark shadow on the markets. Adding further pain was US economic data for housing which came out today and was below expectations, with US building permits coming in at 1.22M (1.25M exp) and US housing starts coming in weaker as well at 1.16M (1.22M exp). All of this putting a lot of pressure on the markets and none more so than speculative metals which have slowly clawing back further ground on the charts; even after yesterdays rise in the dollar.
Silver for me has been quite a strong trade as of late. After pushing through the trend line we saw continued bullish movements before a resurgent USD looked to stop any further movement. However, the trend line acted as dynamic support and then today’s candle engulfed all movements, which in turn has renewed confidence in the bulls. Silver has so far pushed above the 200 day moving average and traders could potentially be looking to swing higher to resistance levels at 17.696 and 18.607. If we do see a break through the trend line then support levels at 16.530 and 15.664 are likely targets for traders.
Wednesday always goes off with a bang in oil markets as the Department of Energy in the U.S. release its reports on oil stockpiles and the market saw another strong drawdown of -8.94M barrels, bringing it in line with January 2016 in regards to overall stockpiles. However, markets were bearish for the most part even with the drawdown and this was led in part by US gasoline inventories lifting, as well as US oil production lifting to 9.5M barrels a day (9.4M prev). This shows that the US is still causing issues for the markets at present as it continues to edge more and more oil out of the current shale reserves, putting pressure on global production which is currently oversupplying the market. Long term the market will view the result as bullish, but for now it remains bearish for the short term unless we continue to see strong drawdown’s.
Looking at the chart it’s clear to see that it’s come up just short of support at 46.50, if the market continues to trend as it does, then we should expect to see oil potentially test the next level at 45.47. With each wave thus far being weaker than the next and more bearish I wouldn’t be surprised to see oil continue even lower and crash through other major support levels in the low 40s. In the event we do see a strong pull back then resistance levels can be found at 48.46 and 50.21 – which is likely to be the key level of resistance in the market at present.