Silver Price Forecast – Low Volatility Environment for Silver Persists

Federal Reserve Chairman Jerome Powell has one more day of testimony in front of the U.S. Congress. Today at 10am EST, Powell begins his second day of semi-annual testimony. He will be speaking to the Committee on Banking, Housing, and Urban Affairs.

Fed Anticipated to Hold Rates Steady

So far, Powell has mentioned he still sees a strong economy even with the China virus and there is no need yet to lower rates due to the impact from the virus. The Fed is widely expected to hold rates steady for now. Powell’s comments regarding the impact on the economy from the growing coronavirus outbreak will be watched closely on Wednesday for signs of potential changes to interest rates by the Fed.

The U.S. dollar index holds steady around recent trend highs. This follows a six-week advance for the dollar index.

Silver Remains in Low Volatility Environment

Currently, silver is trading down $0.13 or -0.73% to $17.49. It remains stuck within consolidation and a low volatility environment. Until silver trades out of the falling parallel trend channel, where it has been trading since the correction off the $18.84 swing high hit in early January, the low volatility period is likely to persist.

Critical Support Zone

At the low of the channel, $17.07, there is critical support for silver from that low down to approximately $16.80. A drop to $16.80 will break the long-term uptrend line, which is short-term bearish.

Nonetheless, we’ll have to watch how price behaves around the lower price levels to see if weakness will continue following a breakdown of the uptrend line, if it is to occur. There could be a false breakdown with price turning back up. The lower price level of $16.80 is the bottom of a Fibonacci confluence zone, where several measurements identify possible support.

Upside Price Levels to Watch

On the upside, first watch for a rally and then a daily close above $17.87 for the first bullish signal that triggers the beginning of a breakout of the falling channel. After that, the next swing highs of $18.08 and $18.33 need to be broken to confirm further strengthening. Thereafter, given the long-term bullish pattern in silver, an eventual rally to above $18.84, the top of the channel, is likely.