While Gold has been getting all the attention, as the price of Gold makes multi years highs in 2020, Silver has been stuck in a 4+ month consolidation move, after seeing a massive spike back in Sept 19 when it hit $19.50, from the lows in May of around $14.50.
Since then we have had a false breakout to the downside in late Nov (see chart below), which was followed by a swift move to $18.60 resistance. However, it began to drift lower as it formed a tight range with an ascending triangle. This slow drift lower occurred despite Gold showing relative strength over the last few weeks.
With the consolidation building within the triangle, decision time is approaching very soon for Silver, perhaps as soon as the coming week on which way will it break out first. Given the overall longer-term trend, indicated by successive higher lows, together with the longer term 52 day moving average (MA) moving higher (green line), the odds are that Silver is set to break out to the upside of its triangle wedge, first to $18.60 resistance, followed by a higher move towards $19.55 resistance.
More importantly based on the last strong move we saw on the daily chart in September 19(see rectangle bar on chart), together with the amount of consolidation since that move, its possible Silver could hit a price target of around $20.60 level in the first half of 2020 at the earliest. This is based on its last explosive move away from the longer term 52 day moving average achieved in 2019 from the current levels of the 52 day MA.
On a more cautious note though, If instead we do in fact see a breach of the triangle towards the downside in the next few weeks, I believe the move will be short lived similar to the false breakout in Nov 19. The reasoning for this is that the global macro environment is very bullish overall for the precious metals with Central Banks easing, printing more QE & plenty of global uncertainty present in the markets.
Since there are many bullish factors in play for precious metals, the weekly chart for Silver offers more bullish upside potential over the coming months and into 2021.
Back in July 19, you can see the breakout higher out of its multiyear downtrend. Since then it has formed a number of higher lows, whilst also hitting the $18.50 resistance twice and failing to close above it on the weekly chart more recently.
If the daily charts are correct, and we see a move higher breaking out of the wedge and above $18.50/60 resistance initially, then there is no material resistance level until we reach $20.25 area.
Furthermore, depending on how much consolidation will be required after reaching $20.25 area of resistance, its certainly possible we can see a move towards the $21.80 resistance in the 2nd half of 2020 or sooner. Especially since Silver has under performed Gold’s move in 2019 and so far in 2020.
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Disclaimer: This post is for educational purposes only, and all the information contained within this post is not to be considered as advice or a recommendation of any kind. If you require advice or assistance please seek a licensed professional who can provide these services.
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I am a private trader and equities investor that loves the trading and investing world, following the markets and everything in between.