Spot Silver is edging higher on Tuesday after finding support inside a key support zone at a major moving average. The move so far is a technical bounce. There hasn’t been a meaningful rally.

The main trend is down according to the daily swing chart. A trade through $62.33 will signal a resumption of the downtrend. A move through $68.33 will change the main trend to up.

The range from the July 17 bottom at $54.78 to the August 28 top at $71.18 has formed a retracement support zone at $62.98 to $61.04. Inside this zone is the 50-day moving average at $62.64. Yesterday’s low at $62.33 and today’s low at $62.56 hit this zone. Today’s bounce overcame the upper, or 50%, level at $62.98.

What to Watch

Wednesday’s Fed decision is the trade. Silver absorbed the worst the yield and dollar markets had to offer this week and bounced. Short sellers who leaned on this metal at $63 watched it hold twice and come back through the 50% retracement level. That is uncomfortable positioning heading into a policy announcement where one sentence from Warsh can shift the rate story.

Crude above $100 and the Saudi pipeline outage are keeping inflation expectations firm. That pressure is real but it has had two full sessions to crack the floor and has not done it. The question is whether Warsh gives buyers enough room to build or whether he hands sellers another reason to come back.

The bias leans bearish with the main trend down on the daily swing chart. Monday’s low at $62.33 and Tuesday’s low at $62.56 both landed inside the retracement zone at $62.98 to $61.04 with the 50-day moving average at $62.64 sitting in the middle of it. Buyers defended the zone and pushed back above $62.98. Resistance above sits at $65.33 to $66.76 with the swing top at $68.33 needed to flip the trend. A break through $62.33 reopens the downside toward the support cluster at $61.04 and $60.835.

More Information in our Economic Calendar.