Silver prices surged on Friday, propelled by a weak US dollar, following the release of the Non-Farm Payrolls report. The precious metal gained well over five percent on Friday.
The move above two weeks’ trading range, around $20.00, prompted strong technical buying as the shiny metal moved to hit three-week high close to the $21.00 resistance level.
Precious metals in general moved sharply higher last Friday. Copper also caught a strong bid as China pledged to ease COVID-19 restrictions, prompting strong risk-on sentiment.
Gold also ramped higher last week. Silver and gold usually share a strong price correlation due to the safe haven status of both metals and their correlation with the greenback.
Watch out for fireworks this week in silver if the price moves above the $21.30 resistance level. Gains above this area could prompt more strong upside gains ahead.
Current sentiment metric towards silver show that traders remain overly bullish towards the price of silver. The ActivTrader market sentiment tool shows that 76 percent of traders are bullish towards silver.
While this one-way sentiment bias it is not bullish for silver price as retail are heavily leaning on the buy side. However, retail buying is down by around 14 percent from last week.
Silver short-term Technical Analysis
The short-term technicals for the shiny-metal shows that a huge head and shoulders pattern has taken shape, and that silver is going to start its next major down move if the pattern is ignited.
Looking more closely at the head of the pattern we could probably expect more upside towards the $23.00 area if silver price holds above the $21.30 level.
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Silver Medium-term Technical Analysis
The daily chart shows that silver price is in trouble over the medium-term horizon while they hold under the bottom of its 2-year trading range, located around the $21.50 price level.
The clearly visible range breakout on the daily time frame indicates that we should probably expect more downside around the $12.00 level at some point if price holds under $21.50.
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