Silver Price Prediction – Prices Attempt to Rally on Coronavirus Scare

Silver prices attempted to push higher, but prices were rejected at higher levels.  While the coronavirus has added volatility and uncertainty as it pertains to growth, the safe haven natural of silver demand helped buoy prices.

Gold continued to rally, breaking out of a cup and handle pattern, but this was not strong enough to pull silver higher. The US dollar moved higher against most major currencies, which also generates a headwind for silver prices. This is because silver is priced in dollars, and a stronger dollar makes silver more expensive in other currencies. Hedge fund trader reduced both long and short positions in futures and options according to the latest Commitment of Trader’s report.

Technicals

Silver prices intra-day were rejected multiple times at $18.34, and closed near the open, which is a sign of uncertainty. Trend line resistance on silver prices is seen near a downward sloping trend line that comes in near $18.70. Silver will need to close through this level to confirm a breakout.

Short-term support is seen near the 10-day moving average at $17.94. Short term momentum on silver prices is positive as the fast stochastic generated a crossover buy signal in oversold territory. The fast stochastic has moved out of oversold territory and is currently printing a reading of 32, above the oversold trigger level of 20.

Medium-term momentum is neutral. The RSI (relative strength index) is moving sideways to slightly higher but the rangebound nature of the RSI movement reflects consolidation. This is the same for the MACD (moving average convergence divergence) histogram which is printing in the red with a flat trajectory that points to consolidation.

Managed Money is Still Long

Hedge funds exited from both long positions and short positions in futures and options according to the latest commitment of trader’s report released for the date ending January 21, 2019. Managed money reduced their long position and short position in futures and options by 2K on each side. The total open interest in the managed money space is skewed to the long side, with the open interest nearly 3-times large for long positions than short positions.