Commodities

Technical Analysis – Silver crashes by 12%; next support within 23.00-22.20 area

Posted on September 23, 2020 at 11:08 am GMT

Christina Parthenidou, XM Investment Research Desk

Sliver staged a dramatic decline of 12% this week after failing to close above the 20-day simple moving average (SMA). The sell-off has also pushed the price below the 50-day SMA and near the bottom of the Ichimoku cloud for the first time in three months, bringing the case for a downtrend forward.

The momentum indicators are painting a gloomier short-term picture as well. The MACD has extended its weakness into the negative area, while the RSI is forcefully falling towards its 30 oversold level.

Should the 23.00 level give way, the bears may need to remove the 22.20 support in order to pick up steam towards the 19.63 key area.

On the flip side, failure to close below 23.00 may generate upside pressures towards the 25.20-25.80 zone, where the 50-day SMA is currently hovering. Higher, the price may attempt to pierce the 20-day SMA and close above the 27.50 resistance region. A sustainable move above 28.00 may also be required for the commodity to rally towards its 5-year peak of 29.83.

In brief, silver may remain under bearish control in the near-term, with the sell-off expected to gain fresh momentum below the 23.00-22.20 region.

silver

Legal disclaimer: The material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instruments. XM accepts no responsibility for any use that may be made of these comments and for any consequences resulting in it. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. The research and analysis does not involve any specific investment objectives, financial situation and needs of any specific person who may receive it.

It has not been prepared in accordance with legal requirements designed to promote the independence of research, and as such it is considered to be marketing communication. Although we are not specifically constrained from dealing ahead of the publication of our research, we do not seek to take advantage of it before we provide it to our clients. We aim to establish, maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. We operate a policy of independence, which requires our employees to act in our clients’ best interests and to disregard any conflicts of interest in providing our services.

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losing all of your invested capital, so please make sure that you fully understand the risks involved.