Commodities

Technical Analysis – Silver rallies like there is no tomorrow; bias cautiously bullish

Posted on July 22, 2020 at 2:40 pm GMT

Christina Parthenidou, XM Investment Research Desk

Silver accelerated like there is no tomorrow to a seven-year high of 23.00 in just two days, and after breaching a soft descending trendline and the 19.63 peak from September 2019.

The staggering move drove the RSI and Stochastics to overbought territory, hence downside corrections should not be surprising in the short-term. Still, the industrial metal managed to secure significant ground and put itself back to a positive path, and any pullback should be substantial in order to push the price back below the trendline.

The red Tenkan-sen line in the four-hour chart at 21.63 has been quite supportive this month and could immediately add footing to the price if the bears return. In the event it fails to do so, the 2016 highs around 20.50 and the 20.00 round number may come under the spotlight before all attention turns to 19.63. Lower, the 20-day simple moving average (SMA) at 18.85 may attempt to stabilize the selling pressure too.

Meanwhile in the one-hour chart, the market seems to be trading within a bullish pennant that has been created after the steep rally. A decisive close above that formation and the 22.30 level could see the retest of the 23.00 top. Running higher, the bulls may initially find resistance near 24.00 and then around 26.15.

Summarizing, Silver is viewed as cautiously positive in the short-term. A close above 22.30 may bring the bulls back into play, while a drop below 21.63 may add more weight on the price.

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.