The price of silver, along with gold, have been in the spot lights this week given their tight correlation to rates. After the Fed announced a historical rate increase of 75 bps on Wednesday, it seems like a good time to check on the price action of both gold and silver this week. In this article we cover the recent price action in silver as a complement to this gold outlook analysis.
Silver Price Action Still Constructive Even After A Significant Rate Hike
Silver is showing relative strength given the magnitude of the rate increase. The first chart below is a weekly one and clearly indicates how the week prior to the FOMC meeting was a week of indecision in Silver. The candle from the week of the announcement (annotated in pink) clearly indicates how the buyers stepped in with volume.
After the price was rejected again around $22 on the week ending on the 10th of June, it stopped falling on Tuesday only to recover on Wednesday, the day of the FOMC announcement. As if the market realised the worst scenario could be already priced in. $22 however remains a resistance that needs to give for Silver to continue moving upwards.
Moving on to the zoomed out weekly chart. This is the setup we continue to monitor and so far, it looks like the price is still trying to reverse from there.
The major set up we continue to watch is the multi month bull flag on the monthly. This is a major setup in our bullish thesis on Silver. A breakout to the upside will catapult silver price to $40 pretty fast.
Meanwhile, these are the resistance levels to keep an eye on: $22, $24-$25, $30. For the support levels and possible scenarios, please refer to Silver price on the verge of a big move.
We include silver price analysis both in our trading oriented Trade Alerts service as well as our stock investing oriented Momentum Investing service. Both services include silver price analysis in the weekend alerts.
Written by hdcharting, reviewed by Taki Tsaklanos