Key Points:
- Rally should remain intact but moderate slightly.
- This would be an end to the long-term downtrend.
- Fundamentals still driving the rally.
Silver could be about to slow or even end its rather impressive rally as it approaches a fairly strong zone of resistance. However, given the metal’sapparent immunity to the influence of the bears,it could continue to surge strongly higher instead. As a result, it’s worth taking a look at some of the technicals to see what’s next for silver.
From a technical perspective, the long-term downtrend is very much in danger of being ended. A push significantly beyond the 18.00 handle would finally free silver from the confines of that relentless bearish trend line that made its presence felt so keenly early on in the piece. If the metal does escape to the upside, the resulting surge higher could be strong indeed.
Specifically, the EMA’s are about as bullish as you can get and this is mirrored by the parabolic SAR reading. The combined effect of these technicals could produce a sizable amount of support for the metal which could extend its recent trend as is. However, there is some evidence suggesting that the uptrend could moderate or even stall temporarily.
Indeed, the intersection of the 78.6% Fibonacci level and the declining trend line could prove a rather formidable impasse for silver. However, what is more likely given the strong fundamental forces driving silver prices higher, is that the rally moderates slightly as it seeks to test the 19.00 handle.
This moderation is supported by the stochastics and RSI readings on the daily chart. More precisely, whilst stochastics are already heavily overbought, the RSI still has some more room to manoeuvre which should leave the metal with some ability to climb higher. As a result, we should see more gains but not at the pace that has been seen recently.
Ultimately, keep an eye on Trump as well as if there is anything able to cause a spike in market fear and therefore a spike in silver, it’s him. This being said, also keep an eye on any developments in the Brexit saga as we could start to see more details about the triggering of article 50 come out in the lead up to march.
