Silver Price Prediction – Silver Drops as Momentum Remains Negative

Silver prices dropped again on Tuesday following a robust decline on Monday. The dollar edged higher, weighing on silver and generating headwinds for the entire precious metals complex.  U.S. Yields where mixed.  Another piece of the housing puzzle was released on Tuesday with the Commerce Department reported Housing Starts and building permits.

Technical analysis

Silver prices dropped on Tuesday for a third consecutive trading session headed to a horizontal support line seen near 23.86. Resistance is seen former suport near $25.55.  Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. The fast stochastic has moved lower, printing a reading of 6, well below the oversold trigger level of 20, foreshadowing a correction. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) generated a crossover sell signal. This 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).

Homebuilding Increased in June

Housing starts in the United States rose more than expected in June. According to the Commerce Department, Housing starts rose 6.3% in June. Data for May was revised down. Expectations had been for housing starts to rise to 1.59 million units. Permits for future homebuilding fell 5.1% in June. Demand for housing is driven by declining interest rates and despite robust increases in home building materials such as lumber.