Silver Price Prediction – Prices Break Out Forming a Reverse Head and Shoulder

Silver prices surged higher, breaking out to a three-month high and forming a reverse head and shoulder pattern.  The dollar also rallied sharply but U.S. yields were unchanged. The bond market was closed in the U.S. in observance of Veterans Day. Jobless claims hit a pre-pandemic low, which has helped to buoy gold prices.

Technical analysis

Silver prices rallied breaking out and surging higher after falling to break through trend line resistance on Wednesday. Prices are forming a reverse head and shoulder pattern which is a bottoming breakout pattern.  Support is seen near the 10-day moving average at 24.15. Short-term momentum has turned positive as the fast stochastic generates a crossover buy signal. Prices are overbought asw the fast stochastic is printing reading of 99, above the overbought trigger level of 80. Medium-term momentum has also turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD line). The MACD histogram is printing in positive territory with an upward sloping trajectory which points to higher prices.

Employment Data is Strong

Employment data continue to improve which could force the Fed to tighten sooner rather than later. Jobless claims fell to a new pandemic low 267,000 last week as the job market recovers from last year’s sharp coronavirus downturn. Jobless claims fell by 4,000 last week, the Labor Department reported Wednesday. The four-week average of claims, dropped by nearly 7,300 to 278,000, also a pandemic low.