Silver price analysis (14-20 June): ready for an up-move
Silver’s analysis shows the price is consolidating with a marginal advantage to buyers
The US consumer price index surged at an annual rate of 5% in May, its highest rate since 2008. This shows that pent-up demand is picking up as the economy reopens, following the vaccination programme and the reduction in COVID-19 cases.
However, the US Federal Reserve believes inflation is transitory and is likely to refrain from tightening. Deutsche Bank economists however warned that inflation may persist and “the effects could be devastating, particularly for the most vulnerable in society”.
If inflation fears rise, investors are likely to hedge their portfolios with gold and silver. The white metal is more volatile compared with gold and it may attract the attention of the retail crowd chasing momentum. If that happens, silver could outperform gold on the way up.
Is this a good time to buy silver? Will the silver price go up or correct in the short term? Read our silver price analysis to find out.
Silver technical analysis: weekly chart
Silver’s price witnessed a sharp rally from its March 2020 low of $11.628 to a high of $29.855 in August 2020, a 156% rally within a few months. However, since then, silver has been digesting the sharp gains inside an ascending triangle pattern.
This bullish setup will complete on a breakout and close above $30.50. If that happens, silver could embark on a journey toward the pattern target of $38.923.
Both moving averages are gradually sloping up and the relative strength index (RSI) is in the positive zone, indicating advantage to the buyers. If silver rebounds off the moving averages, the bulls will make one more attempt to clear the overhead hurdle and start the next leg of the uptrend.
This bullish view will be invalidated if the bears sink the price below the trendline of the triangle. Such a move could pull silver’s price down to $21.877.
Silver technical analysis: daily chart
Silver’s price has formed a symmetrical triangle pattern, which indicates indecision among the bulls and the bears. The flattish 20-day exponential moving average (EMA) and the RSI near the midpoint suggest a balance between supply and demand.
The price turned down from the resistance line of the triangle on 11 June but the bears could not sink the price below the support line.
This shows the buyers are defending the 50-day simple moving average (SMA). The price could now remain stuck inside the triangle for a few more days.
A breakout and close above the triangle will indicate that the bulls have overpowered the bears. That could result in a build-up in bullish momentum, propelling the price to $30.302.
This positive view will invalidate if the price turns down from the current level or the overhead resistance and breaks below the triangle. Such a move will suggest the start of a short-term correction that has a target objective of $25.14.
Silver buy or sell this week?
The silver price analysis shows a consolidation inside a bullish setup on the weekly time frame. On the daily chart, the price is stuck inside a continuation pattern. This suggests the trade favours the bulls.
A breakout and close above the symmetrical triangle will be the first sign of the start of the next leg of the up-move. The momentum could pick up further after the bulls drive the price above the ascending triangle pattern.