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Silver (XAG/USD) Maintaining Bullish Mode; FOMC Ahead

Looking at the 4H chart, Silver (XAG/USD) remains strong after a dip to start the week. After falling from 19.89 to 19.46, silver price found support and bounced off a rising trendline that held June's price action bullish.

(silver 4h chart, 6/18)

Even though June price action has been bullish, you can tell from the moving averages that direction in the higher time-frame is directionless. The daily chart shows that in fact, there is some prevailing bearish bias. Therefore, the current bullish outlook should be limited to about 20.00, or at most up to the 20.50-60 area. A break below 19.46 should return the outlook back towards the 18.70-19.00 low. Only a break above 20.60 should open up a bullish outlook for the rest of the year.

Janet Yellen and the FOMC will conclude their 2-day meeting during the 6/18 US session. A hawkish outcome is one that projects the next rate hike in the first half of 2015, while a dovish one forecasts a rate hike later in the year. The hawkish scenario should strengthen the USD, which should keep the 20 area a strong resistance for silver, and also put the pressure to the 19.46 intra-day low. A dovish one might allow silver to test 20, and maybe the 20.60 high.