Silver prices on both the spot and futures markets are rising this Tuesday on the back of the renewed risk-on sentiment in the markets, which is lifting most commodities and stock indices on the day. Despite little data to suggest improvement in demand going forwards, silver prices topped the $15 mark and are currently 1.15% higher on the day, after touching off intraday highs at 15.498 and pulling back slightly.
Despite the renewed optimism that the coronavirus outbreak may have peaked and that some of the worst-hit countries may have turned a corner, this is yet to translate into renewed demand for the asset as factory production has still not recovered to pre-coronavirus levels.
Silver prices on the XAGUSD spot asset touched off intraday highs at the 15.498 resistance area, where previous highs of 20 June and 3 July 2019 are found. This price level represents the first obstacle towards the completion of the price project from the bullish flag pattern, which kicked off on 19 March 2020. The measured move should be completed somewhere around the resistance at 16.563, formed by previous lows of 13 August, 6 December 2019 and 28 February 2020 that should now act in role reversal. A breakout of 15.498 and 15.994 need to occur for the measured move to be completed.
On the flip side, this recovery may be seen as an opportunity to sell on rallies. Therefore, if the downtrend seen earlier on silver price resumes, we could see a rejection of the price candles at any of the support levels mentioned earlier. This move opens up the doorway for silver price to target the support areas that currently exist at 14.977 and the 28 May 2019 and 6 April 2020 lows at 14.315. A breakdown of 13.965, which is close to the lower border of the flag’s consolidation area, invalidates the upside and cascades into a further selloff that targets the January 2009 low at 11.812.