EDITOR NOTE: Silver’s surge beginning in late July can be described in market technician’s terms as “parabolic.” When a market goes parabolic, it shoots up at an angle that’s significantly steeper (and faster) than what a normal curve might look like. A pullback is natural under these circumstances, as no asset can continue to climb at such a high rate without taking a breather. The article below discusses silver’s technical scenario. If you’re not much of a chartist, the important takeaway is that as long as silver stays above $20 an ounce, its uptrend momentum is still strong. That’s the technical take. Fundamentally, the closer it gets to $20 (or even below) the greater the buying opportunity, as the overall outlook on inflation, global economic uncertainty, COVID, geopolitical tensions, and industrial demand all point to silver shooting well beyond the current $30 threshold.
Early attempts of a range breakout can be observed in the white metal with resistance awaiting at $30.72. On the flip side, the $22.90 support holds further weakness, strategists at Credit Suisse apprise.
“Silver is hovering not far away from its upper consolidation range at $29.84, and with a multi-year base in place and with the market still well below its record highs this remains seen as a temporary breather ahead of a fresh move higher in due course, with resistance seen next at $30.72 and eventually we think more meaningfully and what is our base case objective at $35.23/35.365, which is the 61.8% of the entire 2011/2020 bear trend and key price resistance from September 2018.”
“Support at $22.90 ideally holds further weakness – the 38.2% retracement of the 2020 rally thus far. A break though would warn of a deeper corrective setback with support next at $20.75, then $19.65.”
Originally posted on FXStreet