Silver prices are starting to reverse sharply lower again due to rising bond yields and a stronger US dollar, which has been a major problem for the shiny metal over the past month or so.
Silver eventually reacted bearishly to the American consumer confidence index release yesterday, which fell to 106.4. This market a down move from April’s revised reading of 108.6, the U.S. Conference Board reported Tuesday.
Economists expected to see a sharper drop in the index to a reading of around 103.9. The initial market reaction to the latest economic data was not strong, however silver and the yellow metal, gold, are now seeing some renewed selling pressure as the U.S. dollar attracts some new buying interest.
Just to look at the Consumer Report again, the report noted that United States consumers’ views on current economic conditions and future expectations dropped in May considerably.
The Present Situation Index fell to 149.6, down from April’s reading of 152.9; at the same time, the Expectations Index dropped to 77.5, down from the previous level of 79.0.
Current sentiment metric towards silver show that traders remain overly bullish towards the price of silver. The ActivTrader market sentiment tool shows that 88 percent of traders are bullish towards silver.
With this increasing and strong one-way sentiment bias it is not bullish for silver price as retail are heavily leaning on the buy side, which could hint at more steep losses under $20.00 for silver price ahead.
Silver short-term Technical Analysis
The short-term technicals for the shiny-metal shows that a technical downtrend is still ongoing, with the potential for a bullish double-bottom price pattern could be forming if the yearly low holds.
Looking more closely, the $20.50 level is worth watching. If this area does form over the coming days then an official double-bottom price pattern could be starting to form, which would be bullish. If it does break, then expect $20.00 or even $19.00.
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Silver Medium-term Technical Analysis
The daily chart shows that silver only remains a strong buy while trading above the $24.00 level, which is still a long way away from price, as the location of the 200-day moving average of the shiny-metal trades at $21.50.
A triangle pattern is clearly visible on the daily time frame. The bottom of the triangle is currently attracting a retest. If not triangle break happens, we should probably expect a retest of the $24.00 resistance level at some point.
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