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Silver Price Analysis: 161.8 per cent lines up with the flag breakout

Although Silver is currently correcting lower, there is no clear indication as a change of trend. Our prime target level ($18.45-18.49).

Market highlights from the last week

Tuesday May 12: Precious metals secured a firm tone on Tuesday with support from a weaker dollar and confidence in longer-term fundamentals. There was also evidence of strong physical demand which underpinned sentiment

Wednesday May 13: Overall, gold made net gains to the $1,715 per ounce area while silver held just above $15.50 per ounce and there was little change on Thursday

Thursday May 14: Precious metals were resilient in the face of a firm dollar ahead of the New York open and moved sharply higher after the US open. There was an important element of unease over US-China tensions and concerns over the potential pace of economic recovery

Friday May 15: Demand for precious metals remained strong on Friday amid underlying concerns over US-China relations. Extremely accommodative central bank policies and upward pressure on budget deficits were also major factors boosting demand

Monday May 18: Precious metals initially made further gains during Monday and a weaker dollar offered net support. There was, however, sharp selling after the New York open as risk appetite improved sharply

Silver Price Analysis

Let us have a look at the technical viewpoint: 

Monthly: Recovered 50.93 per cent from the March base of $12.90. All the April’s price action was confined to the March selloff, an indecisive Inside Month. Strong buying pressure in May has resulted in the March high being tested. 

Weekly: Continues to drive to the upside. A 161.8 per cent extension level is located at 18.49

Daily: Broken out of the channel formation to the upside. This can be seen as a bullish flag pattern. The measured move target is seen at $18.45

Outlook: Although Silver is currently correcting lower, there is no clear indication as a change of trend. With the 161.8 per cent level lining up with the flag target, this zone is our prime target level ($18.45-18.49)

Possible trade setup

Action: Buying at 16.30

Stop: 15.70

Targets: 18.30

Potential return on risk to first target:  R3.3 (reward 200 / risk 60)

Silver Spot
Daily change
17.111
Low: 16.772
High: 17.127

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