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Chart Of The Day: Silver Is The Next Target

By Fawad RazaqzadaCommoditiesJan 29, 2021 11:15
uk.investing.com/analysis/chart-of-the-day-silver-is-the-next-target-200453712
Chart Of The Day: Silver Is The Next Target
By Fawad Razaqzada   |  Jan 29, 2021 11:15
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This article was written exclusively for Investing.com

Despite the recent rebound in bond yields and the US dollar, silver rallied sharply on Thursday and looked set to extend those gains at the time of writing in the early hours of Friday.

It looks like the metal has become the latest target for Reddit day traders who were restricted from speculating on heavily-shorted stocks like GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC) on some trading platforms.

New posts on WallStreetBets on Thursday encouraged people to pile into iShares Silver Trust (NYSE:SLV), which is the largest silver exchange-traded fund. This was possibly behind the metal’s biggest one-day rally since August.

The rally means that after months of consolidation between around $25 to $29, silver has now shown some tentative bull signals that would suggest a fresh rally could be on the cards.

Silver Daily
Silver Daily

Even before Thursday’s rally, the multi-month consolidation, without too much of a pullback from its 2020 high, is in itself a bullish sign, as it suggests the market probably did not peak in August—for if it did, surely prices would have fallen more aggressively by now.

Indeed, from the high of just under $30, silver has not even given back 50% of the gains made since hitting a low in March 2020. The relatively shallow retracement suggests the long-term bull trend remains intact and that silver could be gearing up for a potential breakout soon.

Secondly, silver’s desire to hold around the 21-day exponential moving average, and well above its still-rising 200-day simple average, is indicative of a bull trend.

More to the point, silver created a clear bullish signal on Thursday after breaking through recent resistance zone in the $25.90-$26.00 range after a sharp 5% rally. If the breakout holds above this region then this would keep the bulls interested in looking for fresh technical buying in the days to come.

While the signs look quite promising for the bulls, let’s not forget that silver is still technically inside a larger consolidation pattern and as such it is far too early to get too excited.

For confirmation, silver now needs to print a clear higher high above the peak it made earlier in the month around $27.90ish. A break above this level would also lift silver above the bearish trend line which has been in place since August 2020.

So, we do need to see that breakout, especially given the recent dollar rebound. Indeed, if silver were to go back below that key $25.00 handle again, then at that point you will have to drop any short-term bullish views you might have on the metal and await further bullish price action at some future point in time before looking for long trades again.

Chart Of The Day: Silver Is The Next Target
 

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Chart Of The Day: Silver Is The Next Target

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Comments (3)
Rachel Gooden
Rachel Gooden Feb 02, 2021 15:44
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Be where we are on able to push up the price to affect anything. If the price goes up these big hedge funds will liquidate their position to cover their game stop shorts. It’s going to play into the hands of the wall streetwrs who we are trying to beat
Wayne Stokes
Wayne Stokes Jan 31, 2021 19:59
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Reddit are not trying to short silver! Its just spam bots trying to switch people from #GME to easy the short, silver is a multi billion pound commodity, it would be impossible, why would they even? The whole point of thr reddit movement was about stopping hedge funds destroying already struggling compaines! Its about principles not profits
Rachel Gooden
Rachel Gooden Jan 31, 2021 19:59
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Exactly!
Rachel Gooden
Rachel Gooden Jan 29, 2021 15:42
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I want them to mess wjth this market. Uncover the manipilation.
 
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Disclaimer: Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
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