Silver Daily Forecast – Silver Slides to 10-Week Low

Silver has lost ground for a fourth straight day. Currently, silver is trading at $17.12, down $0.64 or 3.65% the day.

Silver Approaching $17

It has been a rough week for silver. The metal is down 7.5% and is on track to post its worst week since October 2016. Silver is struggling to stay above the symbolic 17.00 level, which has held since mid-December.

As a precious metal, silver can be considered a safe-haven asset. At the same time, it also has use as an industrial component, and this aspect has sent silver prices sharply lower. For example, silver is found in photovoltaic (PV), which is a key component in the manufacture of solar panels. China boasts the largest PV silver market in the world, and the coronavirus resulted in many PV factories having to close. South Korea, another industrial hub for silver, has been hit hard by the coronavirus, as the country’s economic activity has been sapped.

Will Fed Trim Rates in Response to Corona?

Only a few weeks, ago, Federal Reserve policymakers were confidently indicating to the markets that they did not anticipate lowering rates in 2020. However, the devastating economic consequences of the coronavirus may cause the Fed to reconsider this stance.

On Thursday, Chicago Fed President Charles Evans said that the Federal Reserve was paying “close attention” to the outbreak and said that “policymakers must commit to provide extraordinary accommodation in order to meet their mandate.” If the coronavirus spreads in the U.S., the Fed may be forced to cut interest rates.

 

Silver Technical Analysis

As silver falls, support levels continues to break. The 200-day EMA is situated at 17.10 and is located at the candlesticks. This is immediately followed by the round number of 17.00. Below, we find support at 16.30, which is protecting the 16.00 level. Above, we have resistance at 17.50, with the 50-EMA at 17.81. This is followed by the key line of 18.00.

 

Silver Daily Forecast – Silver Slide Resumes, is $17.00 Next?

Silver has lost ground on Thursday. Currently, silver is trading at $17.83, down $0.15 or 0.92% the day. 

Silver Falls on Demand Fears

Silver continues to show sharp swings. After gaining 4.3% last week, silver has slumped this week, surrendering most of these gains. The metal has benefited from its status as a safe-haven asset, but it is also used as an industrial metal. This means that the economic chaos caused by the coronavirus has fueled concerns that weaker growth will reduce the demand for silver. For example, one industrial use of silver is in photovoltaic (PV), which is a key component in the manufacture of solar panels. China boasts the largest PV silver market in the world, and the coronavirus resulted in many PV factories having to close. The virus has also spread to South Korea, another industrial hub for silver.

Meanwhile, gold prices continue to move higher, as the safe-haven asset has attracted investors who are becoming increasingly alarmed as the coronavirus has now spread to Europe and the first confirmed case has been reported in the United States. Earlier in the week, gold touched $1689, its highest level since January 2013. It appears that the metal is poised to break above the lofty $1700 level.

 

Silver Technical Analysis

Silver continues to lose ground this week. The key line of 18.00 has switched to a resistance role, but it is a weak line. Above, we have resistance at 18.60, followed by 19.20.

On the downside, the 50-day EMA is situated at 17.81 and is touching the candlesticks. The next support line is at 17.50. The 200-EMA is at 17.10, followed immediately by the round number of 17.00.

Silver Sliding on Global Growth Fears

Silver is slightly lower on Wednesday, after plunging over 3.3% on Tuesday. Currently, silver is trading at $17.90, down $0.10 or 0.56% the day. 

Silver Falls as Industrial Use Declines

After a strong run in which silver gained over 6 percent, the metal has reversed directions and coughed up most of those gains, falling close to 4 percent. Silver benefited from its position as a safe-haven asset, but the metal is also used as an industrial metal. One key industrial use is in photovoltaic (PV, which is a key component in the manufacture of solar panels. and China boasts the largest PV silver market in the world, and the coronavirus resulted in many PV factories having to close. The virus has also spread to South Korea, another industrial hub for silver.

Coronavirus Reaches Western Europe

It has been a dreadful week for crude, which has slumped 7.1 percent. Investor risk apprehension continues to rise as the coronavirus outbreak has spread to Western Europe. Italy has reported 11 fatalities, while France confirmed its second victim on Wednesday. Spain, Austria and Switzerland have also reported coronavirus cases. The European Union had considered imposing border controls but has decided that such a severe move would do little to contain the virus.

Silver Technical Analysis

Silver continues to lose ground this week. The pair tested the symbolic line of 18.00 on Tuesday and has dropped to a daily low of 17.79 in the Wednesday session. Below, the 50-day EMA is situated at 17.81 and is touching the candlesticks. The next support line is at 17.50. The 200-EMA is at 17.11, followed immediately by the round number of 17.00.

On the upside, 18.00 is an immediate resistance line. Above, we have resistance at 18.60, followed by 19.20.

Silver Hits Wall, Pulls Back Towards $18 Level

Silver has reversed directions on Tuesday and posted slight losses. Currently, silver is trading at $18.34, down $0.28 or 1.56% the day. 

Silver Rally Fizzles Out

Silver has been on an excellent run, climbing 6 percent since February 12. However, the rally has stopped on Tuesday, as silver prices are down 1.5 percent. Silver appears to have been overbought, as investors were only too happy to get their hands on precious metals, such as gold and silver. These safe-haven assets have benefited from growing alarm over the coronavirus, which has sapped risk appetite. This trend was clearly apparent on Monday. Silver touched a daily high of 18.90, its highest level since September 2, while gold prices touched a daily high of 1689.38, its highest level since 2013. Despite the pullback in silver on Tuesday, the trend for silver remains upwards, and I expect a rebound sometime during the week.

Italy Reports Coronavirus Deaths

Investors remain jittery over the coronavirus, which now has an official name – COVID-2019. The virus has now reached western Europe, with Italy confirming two fatalities from the outbreak. This will likely mean more confirmed cases in western Europe since they are no border controls within the European Union. With no signs that the virus will be contained anytime soon, we could see the silver and gold rallies continue this week.

Silver Technical Analysis

After an impressive rally, silver has retraced and is again putting pressure on the symbolic 18.00 level. Below, the 50-day EMA is currently situated at 17.84, followed by support at 17.50. Next is the 200-EMA, at 17.11.

On the upside, 18.60 is an immediate resistance line, followed by 19.20. Above, the lofty level of 20.00 has held in resistance since September 2016.

Silver Daily Forecast – Silver Gains Ground, Closing in on $19.00

Silver has posted slight gains in the Monday session. Currently, silver is trading at $18.76, up $0.28 or 1.56% the day. 

Corona Jitters Boost Silver, Gold

Silver enjoyed an excellent week, gaining 4.2 percent. This marked silver’s strongest week since the final week in August, when silver jumped 5.3 percent.

The coronavirus outbreak continues to spread, raising fears that the virus will reach even more countries. Earlier on Monday, Italy reported 200 confirmed cases, the largest number of cases outside of Asia. Italy’s health officials have imposed severe restrictions, which include limiting transport and the quarantine of individuals in affected areas. With the virus reaching Italy, there is concern that the outbreak could quickly spread throughout western Europe, as the Schengen Area, which covers 26 countries, allows for borderless travel. The European Union has said that it will not impose travel bans, but that could change if other European countries report coronavirus cases.

World Health Organization Director-General Tedros Adhanom Ghebreyesus weighed in on the crisis on Saturday, noting that the increase in cases in Italy, South Korea and Iran “is also a matter of concern and how the virus is now spreading to other parts of the world.”

Investors have reacted by snapping up precious metals, which act as safe-haven assets. Earlier on Monday, silver touched a daily high of 18.90, its highest level since September 2. Gold prices touched a daily high of 1689.38, its highest level since 2013. With no signs of the virus will be contained anytime soon, we could see the silver and gold rallies continue this week.

 

Silver Technical Analysis

As silver continues to rally, the line of 19.00 finds itself under strong pressure. This line could be tested as early as Tuesday. Above, the lofty level of 20.00 has held in resistance since September 2016.

On the downside, 18.60 is an immediate support line. Below, there is support at the symbolic 18.00 level. Next, the 50-day EMA is currently situated at 17.81, followed by support at 17.50.

Silver Poised for Strongest Week Since August

Silver is almost unchanged in the Friday session. Currently, silver is trading at $18.36, down $0.13 or 0.38% the day. 

Gold Rally Lifts Silver Prices

It has been an excellent week for silver, as the metal has gained an impressive 4.5% this week. This is shaping up to be silver’s strongest week since the last week in August, when silver jumped 5.3%.

The coronavirus, which shows no signs of being contained, continues to chill investor risk appetite. The outbreak has caused havoc in the Chinese economy, and this week’s warning from Apple that it would fall short of its revenue forecast due to the disruption of its Chinese production facilities. The disruption to supply-chains is also affecting other multinationals with operations in China.

Nervous investors have responded by snapping up precious metals, with gold prices gaining 3.1% this week. In Friday’s Asian session, gold touched a daily high of 1636.59, its highest level since March 2013. The gold rally has dragged silver with it, as silver prices are at their highest since January 8.

Fed Calls Coronavirus Global Risk

The Federal Reserve minutes, released earlier this week, took note of the coronavirus outbreak. Policymakers highlighted the significant risk posed by the coronavirus, stating that “the threat of the coronavirus, in addition to its human toll, had emerged as a new risk to the global growth outlook, which participants agreed warranted close watching.” Policymakers also said that the outbreak has dampened investor sentiment. This warning from the Fed underscores the threat that coronavirus poses to the global economy, which will likely put upward pressure on silver prices until the outbreak is contained.

Silver Technical Analysis

This week’s silver rally distance has seen the metal put more distance between itself and the key 18.00 level. The resistance line of 18.60 is under strong pressure and could be tested on Friday. This would be a significant development, as this line was last tested in resistance in late September.

On the downside, we find support at the 18.00 line. Below, the 50-day EMA is currently situated at 17.79, followed by support at 17.50.

Silver Daily Forecast – Silver Takes a Breather After Strong Rally

Silver is almost unchanged in the Thursday session. Currently, silver is trading at $18.36, down $0.06 or 0.38% the day. 

Risk Aversion Lifts Silver

It has been an excellent week for silver, as the metal has gained 3.7%. On Wednesday, silver touched 18.46, its highest level since January 8. A key catalyst for this week’s rally was a warning from Apple that its first-quarter sales revenue would be lower than the initial forecast. Apple said that the coronavirus had hampered the delivery of iPhones from its factories in China.

The supply-chain disruptions to Apple’s operations in China are also affecting other multinationals that have set up shop in China, which will mean shortages in goods manufactured in China. This will likely have a chilling effect on risk appetite, which is good news for safe-haven assets such as silver. Gold has also benefited from the coronavirus crisis, as gold prices broke above the psychologically important $1600 level earlier in the week, for the first time since 2013.

Fed Concerned About Coronavirus

The Federal Reserve minutes, which were released on Wednesday, indicated that policymakers are cautiously confident that they can maintain current interest rate levels in 2020. At the same time, the minutes highlighted the significant risk posed by the coronavirus, stating that “the threat of the coronavirus, in addition to its human toll, had emerged as a new risk to the global growth outlook, which participants agreed warranted close watching.” Policymakers also said that the outbreak has dampened investor sentiment. This warning from the Fed underscores the threat that coronavirus poses to the global economy, which will likely put upward pressure on silver prices until the outbreak is contained.

Silver Technical Analysis

Silver has managed to put some distance between itself and the 18.00 level, which is providing immediate support. Below, the 50-day EMA is currently situated at 17.74, followed by support at 17.50. The 200-day EMA follows at 17.04, just above support at the round number of 17.00. On the upside, there is resistance at 18.60, followed by resistance at 19.20.

Silver Climbs to 5-Week High, is $19 Next?

Silver has posted slight gains on Wednesday. Currently, silver is trading at $18.33, up $0.12 or 0.70% the day. Silver prices have jumped 3.5% this week, as jittery investors have boosted safe-haven assets such as silver.

Silver Rally Continues After Apple Warning

Silver is up for a fifth straight day and has touched a daily high of $18.39, its highest level since January 7. Silver prices stormed past the symbolic $18.00 level on Tuesday, for the first time since February 3. It was a similar story for gold, which crossed above the psychologically important $1600 level on Tuesday, the first time that has occurred since January 8.

Investor risk aversion has climbed this week, following Apple’s warning letter to the markets that its Q1 sales will be lower than the initial forecast. Apple said that the coronavirus had hampered the delivery of iPhones from its factories in China. The company tried to put a brave face on the announcement, saying that “this disruption to our business is only temporary” and that outside of China, demand for the company’s products remains strong.

However, investors are painfully aware that the havoc caused to Apple’s supply chains is also being felt by other multinationals located in China, including the major automotive companies. With some 60 million Chinese under quarantine, it’s clear that the massive closures of factories and shops will have a chilling effect on goods produced in China, which should be bullish for silver prices.

 

Silver Technical Analysis

Silver has managed to put some distance between itself and the 18.00 level, which is providing immediate support. Below, the 50-day EMA is currently situated at 17.72, followed by support at 17.50. On the upside, we find resistance lines at 18.60 and 19.20.

Silver Price Forecast – Silver Confirms Strength that Points to Higher Prices

Silver showed new strength on Tuesday as it advanced above a minor swing high of $17.87. That was the next price point to watch where silver could see some resistance. It did not, and therefore the move gives a new sign that silver is getting stronger following the breakout of a descending wedge pattern last Friday.

Currently, silver is up 0.16 or 0.91% to $17.92.

Silver Daily Chart

Apple Miss Adds Uncertainty

Uncertainty raised by a report that Apple Inc. would miss quarterly sales forecasts worried investors as it shows a direct impact on fundamentals of a leading global technology company due to the coronavirus outbreak.

This leads to questions as to how other leaders are going to be negatively impacted and to what degree. Even though gold many times benefits from increased uncertainty in the global economy and markets, silver can also benefit.

Meanwhile, the U.S. dollar index once again reached a new trend high, even as silver rose. This is another sign of strength for silver as a higher dollar will frequently put downward pressure on precious metals and other commodities.

Meanwhile, the Euro, which has been falling against the dollar for the past 12 days dropped again.

Silver Daily Chart

Significance of Channel Breakout

Given the breakout of a relatively well constructed descending trend channel silver has the potential to rise above $18 and keep going. The breakout of the channel is the first sign that the larger uptrend may be kicking in.

Back in late December silver broke out of a large bullish descending wedge trend continuation pattern and took off from there before hitting a high of $18.84. That high is now the top of the descending trend channel.

The high to low swing ($16.51 to $18.84) of the wedge breakout rally saw silver advance by 14.12%.

It is not unusual to see a degree of symmetry in price swings in markets. If the current advance in price ends up matching the prior advance, then silver would reach $19.481. That target is derived by starting with the low of the channel at $17.07.

Price Levels to Watch on the Way Up

Other price levels to watch on the way up include the prior swing highs of $18.08 and $18.33. Silver could see resistance or breakthrough, providing a new sign of strength.

Silver Price Forecast – Silver Slowly Moves Higher and Remains Prepped to Strengthen

Silver strengthened on Monday as it reached a 10-day intraday high following a bullish breakout last Friday. In addition, last week’s high was exceeded providing an initial bullish signal on a weekly time frame.

Silver Daily Chart

Bullish Breakout in Silver

A breakout of a descending trend channel occurred last week with silver closing the week above the top trend line of the channel, and on a weekly basis closing at a three-week high. Currently, silver is at $17.80, up 0.071 or 0.40%.

Ideally, for the bulls, we would subsequently see an increase of momentum and buyer enthusiasm in price. So far, that’s not the case, but given that banks, stock and bond markets are closed in the U.S. due to the President’s Day holiday, activity levels can be expected to be muted.

China Liquidity

Fear of slowing global growth persists due to the impact on the economy from the spread of the coronavirus outbreak in China and elsewhere. Expectations are that central banks will continue to pump liquidity into the system to counter the negative impact of the virus.

In this regard, China’s central bank said today it would allow banks to increase their number of non-performing loans thereby freeing up capital and releasing liquidity into the economy.

On Wednesday, the U.S. Federal Open Market Committee releases meeting minutes, which will provide additional details as to how the Federal Reserve is thinking about the dynamic economic situation.

Meanwhile, the U.S. dollar index advanced to a new trend high. This is the tenth day in a row where the dollar exceeded the prior days high.

Silver 4-Hour Chart

Bullish Moving Average Crossover Confirmation

The 4-hour intraday chart provides a close-up view of recent price action. Today, there was one new piece of evidence on the intraday chart supportive of a continuation of the bullish move. The 21-period exponential moving average (ema) crossed above the 55-period ema.

Now, although this has happened before since silver started to correct off the $18.84 high from six weeks ago, it still provides another piece of evidence for higher prices.

Also keep an eye on the daily chart for a moving average crossover as that will give a stronger bullish confirmation signal. Of course, other moving average time frames can be used if there is a short and longer time frame period combined.

Silver Price Forecast – Silver Moving Higher as it Breaks Above Trend Line

Silver has exceeded the top of yesterday’s range, has been moving higher all day, and has now broken above the downtrend line following the release of U.S. retail sales numbers for January. Today’s advance provides a new bullish signal that could see silver continue to advance in the near-term. Currently, silver is at $17.77, up 0.148 or 0.84% for the day.

Silver 4-Hour Chart

Close-Up on Recent Price Action

Looking at the 4-hour intraday chart we can see more details of the recent price structure. Silver has broken above the downtrend line at the top of a descending parallel trend channel. Look at how the 21-period exponential moving average (ema), orange line, has identified essentially the same price resistance area as the trendline thereby giving a little more significance to the breakout.

We must keep in mind though that the trend line is approximate and not reliable by itself to signal a decisive price breakout that may keep going. Nevertheless, when considered along with the 21-period ema, that price resistance area takes on greater significance as it indicates that the trend line is probably in the right place.

Silver Daily Chart

Watch for New Evidence of Strength

To further confirm strength of the breakout silver needs to move above the most recent swing high of $17.866, and then close above it on a daily basis. At that point a bullish reversal is confirmed. This doesn’t ensure that price will keep rising but the chance that it will improves.

Trend Reversal

After that, a daily close above each successive swing high will provide new evidence for a bullish reversal. As shown on the enclosed chart, the subsequent swing highs are $18.082 and $18.334. A swing high has significance as that’s where resistance was clearly seen in the past as it is where an advance was reversed.

Given that a downtrend is defined by a series of lower (swing) highs and lower (swing) lows, that price structure starts to change once a prior swing high is exceeded.

Downside Levels

For support, first watch today’s low of $17.575, followed by the most recent swing low at $17.345. Further down is the critical support level of $17.073 as it is the bottom of the parallel channel correction.

Silver Steady Ahead of U.S. Retail Sales

Silver is steady in Friday trade. Currently, silver is trading at $17.69, up $0.07 or 0.42% the day.

Consumer Inflation Dips, Retail Sales Next

Silver showed a muted response to the January U.S. consumer inflation reports, which were within expectations. Still, there is concern over the persistent low levels of inflation. The headline release dipped to 0.1%, its lowest level in five months. Although the Federal Reserve continues to signal that it has no plans to trim interest rates, policymakers will have to consider a cut if inflation remains barely above the zero level.

We’ll get a look at January retail sales on Friday at 13:30 GMT. The indicator is expected to remain unchanged at 0.3%. However, core retail sales, which posted a strong gain of 0.7% in December, is forecast to fall to 0.3%. Any unexpected readings could trigger some movement in silver prices.

Powell Signals No Rate Cuts Are Imminent

On Wednesday Powell outlined to the Senate Banking Committee his strategy in case of a financial crisis. Powell said that the Fed had two tools to fight a recession – quantitative easing, which involves large purchases of assets, and forward guidance, which means communicating with the markets about the likely future course of interest rate policy. Powell said that he believes that the Fed would use both these tools “aggressively should the need arise to do so”. Under Powell’s leadership, the Fed cut rates three times last year to snuff out any recessionary trends in the economy, but with rates currently at a range of 1.50-1.75%, there isn’t much more room to keep cutting.

 

Silver Technical Analysis

Silver continues to trade in a narrow range between 17.50 and 18.00. The round number of 18.00 continues to show resilience as a resistance line. Above, we find resistance at 18.60. On the downside, the 50-day EMA is currently situated at 17.64 and is touching the candlesticks. 17.50 remains a weak support line. Below, there is support at the round number of 17.00, followed by the 200-EMA line at 16.99.

Silver Price Forecast – Silver May Have a Chance as Global Economic Concerns Worsen Due to Virus

Silver is up 0.2175 or 1.26% today to $17.70, as investors become more risk-averse on growing concerns that the economic impact of the coronavirus outbreak will get worse.

Silver Daily Chart

Impact from Coronavirus Outbreak

Concerns over the economic impact on China and worldwide had eased somewhat yesterday as China reported the lowest number of new coronavirus cases since January. This helped improve investor sentiment globally as it provided optimism that the outbreak would not last long.

Optimism diminished quickly though as Chinese officials reported close to 15,000 new cases on Thursday, after they instituted a new methodology to count cases. The death toll rose to 1,367, from 1,100 reported earlier.

Risk Aversion May Help Metals

Growing concerns about the economic impact from the virus might be giving investors an impetus to become more risk averse. Although gold tends to get more attention from investors, silver can also benefit. It is up today along with gold but remains mired inside a consolidation range. It needs to break out of the range before prices can really move again.

Silver Daily Chart

Trend Channel Breakout Needed for the Bulls

Silver has been pressing up against resistance at the top of a declining trend channel the past several weeks and today’s high hit it once again. A breakout of a trend line does provide a bullish signal but by itself not so reliable without additional confirmation of strength.

That sign of strength would first come on a move above the most recent minor swing high of $17.87, with new signs of strength on a subsequent advance above $18.08 and then $18.33. Once the $18.08 swing high is exceeded on the upside the declining trend channel structure of lower swing highs and lower swing lows is broken.

The Big Picture

At some point following a breakout of the channel the larger bull trend can kick in once again. Back in December silver broke out of a bullish falling wedge and price has not yet hit the minimum anticipated price objective from the wedge formation. Once the channel breakout occurs the potential for the wedge target being reached increases. The minimum target from the wedge is approximately $19.63.

Downside Support

Despite the above bullish slant to the analysis, we don’t know what will happen with silver as uncertainty remains if price continues to progress within the channel. The long-term uptrend line is there on the enclosed chart and should be watch as a possible support zone, followed by the recent low of $17.07, and then a Fibonacci zone from approximately $17.01 to $16.80.

Silver Gains Ground, Investors Eye U.S. Consumer Inflation, Retail Sales

Silver has posted gains in the Thursday session, erasing the losses seen on Wednesday. Currently, silver is trading at $17.66, up $0.18 or 1.03% the day.

Fed Will Use QE, if Needed

Fed Chair Jerome Powell testified before Congress earlier this week and provided some details about the Fed’s monetary strategy. On Tuesday, Powell told the House Financial Services Committee that although the China coronavirus could pose a risk to the global economy, the Fed had no plans to change its current monetary policy.

On Wednesday Powell outlined to the Senate Banking Committee his strategy in case of a financial crisis. Powell said that the Fed had two tools to fight a recession – quantitative easing, which involves large purchases of assets, and forward guidance, which means communicating with the markets about the likely future course of interest rate policy. Powell said that he believes that the Fed would use both these tools “aggressively should the need arise to do so”. Under Powell’s leadership, the Fed cut rates three times last year to snuff out any recessionary trends in the economy, but with rates currently at a range of 1.50-1.75%, there isn’t much more room to keep cutting.

Will U.S. Consumer Data Shake Up Silver?

Later in the week, the U.S. releases key consumer numbers. Consumer inflation and consumer spending have both been soft in recent months, although the U.S. economy remains in good shape. CPI dipped to 0.2% in December, down from 0.3%. Another weak gain of 0.2% is projected for January. It’s a similar story with retail sales, which is expected to repeat with a gain of 0.3%. Any unexpected figure from these key indicators could shake up silver prices.

 

Silver Technical Analysis

Silver continues to trade in a narrow range between 17.50 and 18.00. With the pair still sandwiched between the 50-day and 200-day EMA lines, silver could continue to grind. On the upside, the 50-day EMA is currently situated at 17.67, just above the pair. The round number of 18.00 continues to show resilience as a resistance line. Above, we find resistance at 18.60. On the downside, 17.50 is under pressure in support. The 200-day EMA is at 17.09, followed closely by support at the round number of 17.00.

 

Silver Price Forecast – Low Volatility Environment for Silver Persists

Federal Reserve Chairman Jerome Powell has one more day of testimony in front of the U.S. Congress. Today at 10am EST, Powell begins his second day of semi-annual testimony. He will be speaking to the Committee on Banking, Housing, and Urban Affairs.

Silver Daily Chart

Fed Anticipated to Hold Rates Steady

So far, Powell has mentioned he still sees a strong economy even with the China virus and there is no need yet to lower rates due to the impact from the virus. The Fed is widely expected to hold rates steady for now. Powell’s comments regarding the impact on the economy from the growing coronavirus outbreak will be watched closely on Wednesday for signs of potential changes to interest rates by the Fed.

The U.S. dollar index holds steady around recent trend highs. This follows a six-week advance for the dollar index.

Silver Remains in Low Volatility Environment

Currently, silver is trading down $0.13 or -0.73% to $17.49. It remains stuck within consolidation and a low volatility environment. Until silver trades out of the falling parallel trend channel, where it has been trading since the correction off the $18.84 swing high hit in early January, the low volatility period is likely to persist.

Critical Support Zone

At the low of the channel, $17.07, there is critical support for silver from that low down to approximately $16.80. A drop to $16.80 will break the long-term uptrend line, which is short-term bearish.

Nonetheless, we’ll have to watch how price behaves around the lower price levels to see if weakness will continue following a breakdown of the uptrend line, if it is to occur. There could be a false breakdown with price turning back up. The lower price level of $16.80 is the bottom of a Fibonacci confluence zone, where several measurements identify possible support.

Upside Price Levels to Watch

On the upside, first watch for a rally and then a daily close above $17.87 for the first bullish signal that triggers the beginning of a breakout of the falling channel. After that, the next swing highs of $18.08 and $18.33 need to be broken to confirm further strengthening. Thereafter, given the long-term bullish pattern in silver, an eventual rally to above $18.84, the top of the channel, is likely.

Silver Stuck in Choppy Waters After Powell Testimony

Silver has posted small losses in the Wednesday session. Currently, silver is trading at $17.57, down $0.10 or 0.50% the day.

Powell Signals No Change in Rates Likely

Fed Chair Jerome Powell testified before the House Financial Services Committee on Tuesday. Powell acknowledged that the China coronavirus could pose serious economic risks, but he maintained that the Fed did not plan to change its current monetary policy. Powell told lawmakers that the Fed was “closely monitoring the emergence of the coronavirus, which could lead to disruptions in China that spill over to the rest of the global economy”. Most important for investors, Powell said that “the current stance of monetary policy will likely remain appropriate.”

Powell has now been at the head of the Federal Reserve for two years. Although his approach has been cautious, Powell has not shied away from making monetary moves– in 2019, the Fed trimmed rates three times, in response to weak global growth and the fallout from the ongoing trade war with China. The economic wildcard is, of course, the China coronavirus. The outbreak has severely disrupted China’s economy and is already having a negative impact on the global economy. If the virus is not contained shortly, the damage to the global economy will be substantial, and Powell and his colleagues at the Fed may have to revisit the possibility of lowering interest rates.

Later in the week, the U.S. releases key consumer numbers. Consumer inflation and consumer spending have both been soft in recent months, although the U.S. economy remains in good shape. CPI dipped to 0.2% in December, down from 0.3%. Another weak gain of 0.2% is projected for January. It’s a similar story with retail sales, which is expected to repeat with a gain of 0.3%. Any unexpected figure from these key indicators could shake up silver prices.

 

Silver Technical Analysis

Silver continues to trade in a narrow range between 17.50 and 18.00. On the upside, the 50-day EMA is currently situated at 17.67, just above the pair. The round number of 18.00 continues to show resilience as a resistance line. Above, we find resistance at 18.60. On the downside, 17.50 is under pressure in support. The 200-day EMA is at 17.09, followed closely by support at the round number of 17.00.

XAGUSD Daily Chart

Silver Price Forecast – Further Consolidation in Silver as Investors Watch for Clarity on Rates

Silver is essentially flat, down $0.07 or -0.38% to $17.73, as markets wait for Federal Reserve Chairman Jerome Powell to begin his semiannual testimony in front of the U.S. Congress at 10am EST.

Among other things, investors will be watching to see how the Fed assesses the impact of the coronavirus outbreak on economic growth in both China and globally. This information will help inform their decision on whether to cut interest rates at some point this year. Meanwhile, the U.S. dollar index keeps rising, hitting a new trend high again today.

Silver Daily Chart - close up

Silver Trades Within Range

Earlier today, silver fell to an eight-day low of $17.35 before bouncing back into a three-day range consisting of two inside days. Overall, silver remains in consolidation within a developing descending trend channel.

So far, this pattern is potentially bullish as it is contained within a long-term uptrend and price has stayed above the uptrend line. The line was tested as support once at the $17.07 swing low from three weeks ago and it held. In addition, the channel follows the breakout of a larger bullish falling wedge in December, which has not yet reached its minimum potential price target of approximately $19.50.

Bullish Wedge Breakout

It is significant to consider the bullish wedge within the recent price action of silver as the descending channel is the first price correction following the breakout. As with all upside breakouts of consolidation, once the initial thrust starts running out of steam, a retracement ensues back towards the breakout area or prior resistance. The degree of retracement varies significantly among patterns, however.

Silver Daily

Prices to Watch

A move above the six-day high of $17.87 will signal a breakout of the top trend line at the top of the channel and may give an early signal for a breakout of the channel. Caution is indicated as a breakout of a line by itself is not always reliable.

Further confirmation of strength should be seen shortly thereafter. Following a breakout of the line, first watch for a move above the $18.08 swing high, followed by an advance above and subsequent daily close above the $18.33 swing high.

Protect the Downside

Regardless of whether the overall pattern in silver looks bullish or not, the assessment could be wrong, or it could change quickly. Therefore, also keep in mind potential support areas. They include the long-term uptrend line, currently at around $17.21, followed by several Fibonacci price levels from $17.01 to $16.80.

Silver Remains Choppy, Investors Await Powell Testimony

Silver is trading sideways in the Tuesday session. Currently, silver is trading at $17.71, down 0.28% the day.

Investors Eyes Powell, Consumer Data

Silver continues to trade between 17.50 and 18.00, but that could change this week as there are key events which could impact on market movement. Federal Reserve Chair Jerome Powell will testify before Congress on Tuesday and Wednesday, and investors will be looking for hints with regard to a change in monetary policy. The Fed has been cautious, with Powell and other policymakers adopting a ‘wait-and-see’ attitude before trimming rates. However, the coronavirus outbreak has caused turmoil in the financial markets and the damage to the global economy is likely to be significant. With no end in sight to the outbreak, the Fed may consider lowering rates if it feels that global risks will worsen before we see an improvement.

Later in the week, the U.S. releases key consumer numbers. Consumer inflation and consumer spending have both been soft in recent months, although the U.S. economy remains in good shape. CPI dipped to 0.2% in December, down from 0.3%. Another weak gain of 0.2% is projected for January. It’s a similar story with retail sales, which is expected to repeat with a gain of 0.3%. Any unexpected figure from these key indicators could shake up silver prices.

 

Silver Technical Analysis

Silver continues to trade in a narrow range between 17.50 and 18.00. The 50-day EMA is currently situated at 17.68, just below the pair. Close by, there is support at 17.50. Below, the 200-day EMA is at 17.09, followed closely by support at the round number of 17.00. On the upside, the key level of 18.00 continues to show resilience as a resistance line. Above, we find resistance at 18.60.

 

Silver Steady as Markets Await Powell Testimony

Silver has started the trading week with small gains. Currently, silver is trading at $17.78, up 0.40% the day.

Silver Yawns After Mixed Job Numbers

The U.S. wrapped up the week with mixed employment data. The official nonfarm payrolls report followed in the footsteps of an outstanding ADP nonfarm payrolls earlier in the week and jumped to 225 thousand in January. This was up from 145 thousand in December and easily surpassed the estimate of 163 thousand. Wage growth ticked higher to 0.2%, up from 0.1% in the previous release. Still, this missed the forecast of 0.3%. Silver showed little reaction to the mixed numbers.

Investors Eye Powell Testimony

Federal Reserve Chair Jerome Powell will testify before Congress on Tuesday and Wednesday, and investors will be listening carefully. Any hints about a change in monetary policy could move the markets. The Fed has been cautious, with Powell and other policymakers adopting a ‘wait-and-see’ attitude before trimming rates. However, the coronavirus outbreak has caused turmoil in the financial markets and the damage to the global economy is likely to be significant. With no end in sight to the outbreak, the Fed may consider lowering rates if it feels that global risks will worsen before we see an improvement.

 

Silver Technical Analysis

Silver continues to trade in a narrow range between 17.50 and 18.00. The 50-day EMA is currently situated at 17.68, just below the pair. Close by, there is support at 17.50. Below, the 200-day EMA is at 17.08, followed closely by support at the round number of 17.00. On the upside, silver continues to put pressure on resistance at the key level of 18.00. Above, we find resistance at 18.60.

 

Silver Price Forecast – Long-term View in Silver is Bullish

Today, we look at the larger picture in silver by performing analysis on the monthly chart to see what it might be telling us.

Bullish Long-term Price Pattern

As we watch silver continue to consolidate in the short-term it’s good to keep the price action in perspective relative to the developing long-term pattern. The longer time frame pattern will many times inform price action in the short to intermediate term time frames.

Silver Monthly Chart - Big Picture

One of the things that stands out right away when looking at a monthly chart is that silver is that it has been within a 6 to 7-month consolidation, where it remains today. Price would need to move out of that range before silver sees an improvement in momentum and it starts trending again. As of last month, the consolidation period takes the form of a bullish flag.

Monthly Bullish Flag Formation

The flag pattern is supported by the 21-month exponential moving average (ema), which was tested as support in December and it held. Also, you can see on the chart how the monthly open and closing prices have been at or above support of the 55-month ema during the formation of the flag. The trend recognized by the 55-month ema has been turning up slightly, while the more sensitive 21-month ema clearly turned up back in July of last year.

If the long uptrend line holds then a breakout of the flag should occur before price falls below the line. This may not happen, but the relationship can be watched as we move forward in time.

Silver Monthly Chart - Close Up

Watch for Breakout of Flag

At this point, a breakout above January’s high of $18.85 will initiate a bullish breakout of the pattern. Of course, a move above the top trend line will provide an earlier signal, although less reliable. We’ll have to watch as price rises to the line before determining what price the line represents.

Long-term Price Targets

A couple long-term price targets for silver are marked on the enclosed chart and are identified by looking at the confluence of Fibonacci levels. The first is at $21.95 to $22.19, followed by $27.09 to $27.48. Since these are long-term targets, if they are eventually reached it could take some time. Moreover, silver first needs to breakout of the flag and keep rising, and then breakout of the double bottom pattern, which doesn’t occur until price moves above $21.15.