Earlier in today’s Asian session, silver price sharply traded lower from $1,650.45 to $1,632.90 in a matter of minutes. What happened?
There were no market-moving news and the move seemed to be limited on silver and gold. It would seem that the price action was brought about by profit-taking. If you remember, safe haven assets traded higher early in yesterday’s trading. This was brought about by risk aversion sparked by concerns surrounding the coronavirus outbreak. Worried remarks from G20 leaders as well as the spike in confirmed cases in South Korea and Italy triggered the market’s risk-off mood. However, some market participants argue that the market’s reaction yesterday was exaggerated. This explains why gold and silver were not able to hold on to their gains and even slid lower today.
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Silver Price Outlook
On the 1-hour chart, we can see that the uptrend on silver price is still intact. Connecting the lows of February 18 and February 20, we can see that the commodity just tested support at the rising trend line. This price, $1,634.40, also coincides with the 200 SMA and 61.8% Fib level (when you draw the Fibonacci retracement tool from the low of February 20 to the high of February 24). Reversal candlesticks at this level could mean that silver price may soon trade higher to $1,690.00. On the other hand, a strong bearish close below the trend line could indicate a potential drop to $1,606.00 where the 100 SMA coincides with silver price’s previous lows.