Silver Price Prediction – Prices Break Out but Prices are Overbought

Silver prices continued to break out, rallying sharply and poised to test higher levels. The dollar moved lower, closing near its lows for the session. A weaker dollar generally leads to gains in precious metals. Since silver is priced in U.S. dollars, a weaker dollar generally buoys silver prices. U.S. yields were mixed, with the 10-year yield rising while the 2-year yield pulled back. A rise in the building confidence helped buoy the long end of the treasury curve. Gold prices also rallied sharply, giving a bid to the entire precious metals complex.

Technical analysis

Silver prices broke out and rallied sharply breaking through trend line resistance near 24.17, which is now seen as short-term support. Additional support is seen near the  50-day moving average at 23.29. Prices are poised to test target resistance near the September highs at 24.82. The 10-day moving average is poised to cross above the 50-day moving average, which means that a short-term uptrend is now in place.  Short-term momentum turned positive as the fast stochastic generated a crossover buy signal. Prices are overbought. The fast stochastic is printing a reading of 98, well above the overbought trigger level of 80. The RSI is also rising, reflecting accelerating positive momentum.

Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in positive territory with an upward sloping trajectory which points to higher gold prices.