Silver Price Forecast – Silver May Have a Chance as Global Economic Concerns Worsen Due to VirusAlthough up for the day uncertainty for silver persists as prices remain range bound.
Silver is up 0.2175 or 1.26% today to $17.70, as investors become more risk-averse on growing concerns that the economic impact of the coronavirus outbreak will get worse.
Impact from Coronavirus Outbreak
Concerns over the economic impact on China and worldwide had eased somewhat yesterday as China reported the lowest number of new coronavirus cases since January. This helped improve investor sentiment globally as it provided optimism that the outbreak would not last long.
Optimism diminished quickly though as Chinese officials reported close to 15,000 new cases on Thursday, after they instituted a new methodology to count cases. The death toll rose to 1,367, from 1,100 reported earlier.
Risk Aversion May Help Metals
Growing concerns about the economic impact from the virus might be giving investors an impetus to become more risk averse. Although gold tends to get more attention from investors, silver can also benefit. It is up today along with gold but remains mired inside a consolidation range. It needs to break out of the range before prices can really move again.
Trend Channel Breakout Needed for the Bulls
Silver has been pressing up against resistance at the top of a declining trend channel the past several weeks and today’s high hit it once again. A breakout of a trend line does provide a bullish signal but by itself not so reliable without additional confirmation of strength.
That sign of strength would first come on a move above the most recent minor swing high of $17.87, with new signs of strength on a subsequent advance above $18.08 and then $18.33. Once the $18.08 swing high is exceeded on the upside the declining trend channel structure of lower swing highs and lower swing lows is broken.
The Big Picture
At some point following a breakout of the channel the larger bull trend can kick in once again. Back in December silver broke out of a bullish falling wedge and price has not yet hit the minimum anticipated price objective from the wedge formation. Once the channel breakout occurs the potential for the wedge target being reached increases. The minimum target from the wedge is approximately $19.63.
Despite the above bullish slant to the analysis, we don’t know what will happen with silver as uncertainty remains if price continues to progress within the channel. The long-term uptrend line is there on the enclosed chart and should be watch as a possible support zone, followed by the recent low of $17.07, and then a Fibonacci zone from approximately $17.01 to $16.80.