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Silver price predictions for February: What do technicals suggest?

By David Becker

Prices are likely to rebound to the top end of the current range near $19.50

Silver prices have been range-bound and trading between $19.50 and $16.50. While daily prices appear to be breaking out from the bottom end of the range, they will need to take out the $19.50 level for a long-term trend to accelerate. While daily momentum has turned positive, weekly momentum remains negative. While gold prices are trading at the top end of their 4-year highs, silver, which is considered both a precious metal and an industrial metal, is lagging.

Rising dollar and commodity affect

The US dollar has climbed to nearly a 3-year high, as concerns over the spread of the coronavirus and how it will affect global growth are buoying the greenback. There continues to be a flight to quality with investors entering dollar-denominated assets.

Other commodity products have not faired as well as silver and other precious metals. Oil prices have tumbled and generated selling in commodity indices that have a knock-on effect. Energy demand is likely to continue to soften. US energy and other products will be impacted as the Chinese economy falters. This is likely with China’s oil demand has already fallen by about 30 per cent.

Silver price forecast for February: technical analysis

Silver prices are attempting to break out from the bottom end of their current trading range. Prices are poised to close above a downward sloping trend line that comes in near the highs in January to the second nearest high in late-January and comes in near $17.79. Support beneath this level is seen near the 10-day moving average at $17.71 and the 50-day moving average at $17.67. Resistance is seen near a downward sloping trend line that comes in near $18.60.

Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram has also crossed above the zero-index level generating a crossover buy signal. The MACD histogram is printing in the black with an upward sloping trajectory which points to higher silver prices.

Short-term momentum has also turned positive. The fast stochastic is surging and recently generated a crossover buy signal. The upward momentum in the fast stochastic reflects accelerating positive momentum. The relative strength index (RSI) is moving higher, but remains rangebound, which reflects consolidation.

The weekly chart of silver shows that prices are rangebound. Medium-term weekly momentum is negative as the MACD recently generated a crossover sell signal. The MACD histogram is printing in the red with a declining trajectory which points to lower prices. The fast stochastic recently generated a crossover sell signal and is gliding lower which reflects negative momentum.

Silver price forecast: the bottom line

Silver price action is neutral. Prices are likely to rebound to the top end of the current range near $19.50, but it will take an additional impetus to push them out of this range. While daily momentum is positive and accelerating, weekly momentum is flat to negative. Look for a weekly close above $19.50 to be a signal of a breakout into an upward trend.

FURTHER READING: Silver price forecast 2020 and beyond

FURTHER READING: Is gold a good investment? Five ways to buy it – the pros and cons

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