Silver Price Prediction – Prices Fall but are Oversold

Silver prices continued to trend lower. The dollar moved higher after declining on Friday, but Treasury Yields continued to move more down. Concern over the new covid variant has taken its toll on sentiment. Despite stronger than expected pending home sales, silver prices remained on the defensive. The markets will now wait to see if the current vaccines are effective against the new variant before the next move in the markets are forged.

Technical analysis

Silver prices continued to fall as the route continues. Target support is seen near the September lows at 21.42. Medium-term momentum has turned negative as the MACD (moving average convergence divergence index) generated a crossover sell signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line. Short-term momentum is also negative as the fast stochastic recently generated a crossover sell signal. Prices are oversold as the fast stochastic is printing a reading of 1, below the oversold trigger level of 20 which could foreshadow a correction.

Contracts for new home sales jumped 7.5% in October, according to the National Association of Realtors. Expectations were for pending home sales to remain flat month over month. Sales were still 1.4% lower than in October 2020. Pending sales are a forward-looking indicator of sales that will close in one to two months. Closed sales in October also rose unexpectedly. Sales were strongest in the Midwest and South regions, rising 11.8% and 8.0% month to month, respectively.