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Silver Price Forecast – Further Consolidation in Silver as Investors Watch for Clarity on Rates

By:
Bruce Powers
Published: Feb 11, 2020, 14:37 UTC

Silver continues to consolidate within larger bullish descending trend channel. Investors watch for sign of breakout.

Silver Coins

Silver is essentially flat, down $0.07 or -0.38% to $17.73, as markets wait for Federal Reserve Chairman Jerome Powell to begin his semiannual testimony in front of the U.S. Congress at 10am EST.

Among other things, investors will be watching to see how the Fed assesses the impact of the coronavirus outbreak on economic growth in both China and globally. This information will help inform their decision on whether to cut interest rates at some point this year. Meanwhile, the U.S. dollar index keeps rising, hitting a new trend high again today.

Silver Daily Chart - close up

Silver Trades Within Range

Earlier today, silver fell to an eight-day low of $17.35 before bouncing back into a three-day range consisting of two inside days. Overall, silver remains in consolidation within a developing descending trend channel.

So far, this pattern is potentially bullish as it is contained within a long-term uptrend and price has stayed above the uptrend line. The line was tested as support once at the $17.07 swing low from three weeks ago and it held. In addition, the channel follows the breakout of a larger bullish falling wedge in December, which has not yet reached its minimum potential price target of approximately $19.50.

Bullish Wedge Breakout

It is significant to consider the bullish wedge within the recent price action of silver as the descending channel is the first price correction following the breakout. As with all upside breakouts of consolidation, once the initial thrust starts running out of steam, a retracement ensues back towards the breakout area or prior resistance. The degree of retracement varies significantly among patterns, however.

Silver Daily

Prices to Watch

A move above the six-day high of $17.87 will signal a breakout of the top trend line at the top of the channel and may give an early signal for a breakout of the channel. Caution is indicated as a breakout of a line by itself is not always reliable.

Further confirmation of strength should be seen shortly thereafter. Following a breakout of the line, first watch for a move above the $18.08 swing high, followed by an advance above and subsequent daily close above the $18.33 swing high.

Protect the Downside

Regardless of whether the overall pattern in silver looks bullish or not, the assessment could be wrong, or it could change quickly. Therefore, also keep in mind potential support areas. They include the long-term uptrend line, currently at around $17.21, followed by several Fibonacci price levels from $17.01 to $16.80.

About the Author

Bruce boasts over 20 years in financial markets, holding senior roles such as Head of Trading Strategy at Relentless 13 Capital and Corporate Advisor at Chronos Futures. A CMT® charter holder and MBA in Finance, he's a renowned analyst and media figure, appearing on 150+ TV business shows.

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