XAG / USD breaks out, can Bulls Rally drive?

Silver Talking Points:

  • Silver prices broke out strongly bullish this morning and jumped to a new high in two weeks before prices started to retreat.
  • There have been some interesting ideas around Silver circling social media on the heels of the Gamestop and AMC scenarios. Could something similar happen in Silver?
  • Would you like to know more about Global macro? Finance Prop Education has launched a new content submodule on the topic targeting major economies in North America, Asia and Europe. Click here to check out Finance Prop Education.

Silver prices rose to a new two-week high this morning, showing a strong divergence with gold prices, which are still held by resistance. As viewed yesterday in the run-up to the FOMC tariff decision, gold prices remain in a longer-term digestion situation, but silver prices are starting to show greater resilience with a hint of added strength.

This morning’s move prompted a rapid breakout upward after the US opening, with prices hastily rising to the 27.00 level before sellers came on offer. That psychological level currently helps to mark resistance.

For more information on how rounded whole levels can function as support / resistance, checking out Finance Prop Education

Silver four hour price tag

Silver four hour price tag

Chart prepared by James Stanley; Silver on Tradingview

On that topic of greater resilience than what has recently been seen in Gold, the gold / silver ratio is approaching what could be a significant break below the 70.00 level. In the monthly chart below, you can see how the gold / silver ratio has not seen extensive activity below the 70.00 level since 2016/2017; highlighting the potential for a stronger bid behind Silver versus Gold, especially if this breakaway can hold up in the short term.

For more information on the gold / silver ratio

Gold / silver ratio – monthly chart

Gold Silver ratio

Chart prepared by James Stanley; Gold/Silver on Tradingview

If we step back on the Silver chart, there is a similar case of digestion as price action has spent much of the past six months digesting gains from the five months before. But in the weekly chart below, you can see the recurring tests of the 27.00 handle, and the approaching confluence with the resistance portion of that formation. At the bottom of price promotion, there is a penchant for support to show around the 24.50-25.00 handle, which presents a box-like formation that could lead to future breakouts.

To find out more about symmetrical triangles and how to work with it, see here Finance Prop Education

Silver weekly price chart

Silver weekly price chart

Chart prepared by James Stanley; Silver on Tradingview

Short term silver – what to look out for

At the moment, silver prices remain relatively subdued amid these long-term resistance. But if buyers are able to break the zone that runs from 27.00-27.24, the next resistance level will come around 27.92, the current five-month high. A test above that would also amount to a break of the triangle at the top, leaving the door open to further bullish breakout potential.

Beyond that, there is a large area of ​​resistance around the psychological 30 handle, and this is very close to the current seven-year high. If buyers can sustain a breakthrough, things can get very messy very quickly.

Silver Daily Price Tag

Silver daily price card

Chart prepared by James Stanley; Silver on Tradingview

— Written by James Stanley, Strategist for Finance Prop.com

Get in touch and follow James on Twitter: @Jndkgrf

Source link

Categorized as Forex

By Jonathan Prop

Jonathan Prop is an independent financial advisor. He has been working in finance for the last 20 years. After retiring early in his 40s, Jonathan decided to help others get to grip with financial markets, particularly his area of expertise - forex!

Leave a comment

Your email address will not be published. Required fields are marked *