Fundamental Analysis
Silver is exhibiting bearish momentum this week, driven by a stronger U.S. dollar, rising U.S. Treasury yields, and persistent inflation concerns fueled by higher crude oil prices. These factors have increased market expectations that the Federal Reserve could maintain a hawkish stance and potentially implement further interest rate hikes. As a result, precious metals such as silver are facing downward pressure.
Technical Analysis
From a trading perspective, the current market structure presents potential opportunities for bearish traders. According to the Smart Money Concepts (SMC) framework on the 4-hour timeframe, silver opened on September 27 with a strong bearish candle, signaling significant downside momentum. On September 28, the market began building liquidity and experienced a temporary bullish retracement. This corrective move appears to be aimed at mitigating the order block responsible for breaking market structure before the downtrend resumes.
What will an SMC trader needs to do
An SMC trader should patiently wait for price to retrace into the key Point of Interest (POI), particularly the order block that caused the break of structure. Upon reaching this area, traders should look for a Change of Character (CHOCH) to confirm a bearish continuation. Once confirmed, a limit order can be placed at the order block that initiated the CHOCH, with appropriate stop-loss placement according to the trader’s risk parameters.
Risk Management
Risk management remains one of the most critical aspects of successful trading, especially when trading highly volatile assets such as silver and gold. Given the unpredictable nature of global economic and geopolitical news, traders are strongly advised to implement a disciplined risk management strategy, including proper position sizing, stop-loss placement, and adherence to a predefined risk-to-reward ratio. Protecting capital should always take precedence over pursuing profits.
Conclusion
Overall, silver maintains a bearish directional bias this week, supported by both fundamental and technical factors. Traders should remain patient, wait for high-probability setups, and apply strict risk management principles to navigate market volatility effectively.
[…] you have to understand a directional bias in a trend, find a break of structure then identify and rebel the order block that cause the break […]