The price of Silver is in the process of a large technical price correction after reversing sharply from the $24.50 area as the shiny metal followed other precious metals lower on Friday.
Watch out for fireworks in silver if the price of gold continues to drop next week. The two metals have a strong price correlation and the speed of Friday’s losses certainly hint at more losses ahead.
Precious metals in general have moved sharply higher this year. The Fed rate hikes and the China re-open and pushed down COVID-19 restrictions have caused strong risk-on sentiment.
Silver and gold usually share a strong price correlation due to the safe haven status of both metals and their correlation with the greenback. The US dollar rose sharply after the NFP jobs report last week.
Current sentiment metric towards silver show that traders are turning less bullish towards the price of silver. The ActivTrader market sentiment tool shows that 78 percent of traders are bullish towards silver.
While this is no one-way sentiment bias for silver price as retail have been heavily leaning on the buy side. In my opinion this is a bullish sign.
Silver short-term Technical Analysis
The short-term technicals for the shiny metal shows that silver has broken to the downside after a large sideways price consolidation pattern, and that silver is going to trade even lower.
Looking more closely at the size of the price consolidation and measuring the consolidation phase, we are probably going to see a breakout in the region of $2.00 at some point. Taking silver towards $21.00.
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Silver Medium-term Technical Analysis
The daily chart shows that silver price is in good shape over the medium-term horizon while they hold above the neckline of an inverted head and shoulders pattern, located around the $22.50 price level.
The clearly visible range breakout on the daily time frame indicates that we should probably expect more upside around the $5.00 level at some point silver visiting the $28.00 level.
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