Silver Price Ripe For a Bearish Pullback to $22 and Below
Silver price is down for the second consecutive day as traders continue worrying about the demand as the number of Covid-19 cases continue rising. The price is down by 0.75% today and is at the lowest it has been since October 7. Similarly, the price of gold is also falling today.
Silver is an industrial metal used in the manufacture of products like kitchenware, solar panels, and mirrors. Therefore, its demand tends to rise when the economy is doing well. However, in recent days, investors have been worried about the rising number of Covid-19 cases in the United States and Europe.
In the US, the country is recording more than 70,000 new cases every day even as some states starts to limit movement. In Europe, the number of cases has risen in most countries, which has pushed some countries like Germany, France, and Spain to start limiting activity. Investors believe that this will have a negative impact on silver prices. In similar lines, silver price is falling because of the overall stronger dollar. The dollar index is up by 0.20% because of the Covid risks.
The market is also focusing on the upcoming US election. While polls have shown that Joe Biden will win, they are also aware that the same polls were wrong in 2016. Most investors believe that a Biden presidency will be a good thing for silver price because of his commitment to clean energy.
Meanwhile, a Trump victory would be negative for silver because of his commitment to oil and gas. In an interview, an analyst at MUFG suggested that a Trump victory would lead to a 3% increase in the dollar, which is a negative thing for silver.
Silver price technical forecast
In the daily chart below, we see that silver price has been under pressure recently. It is now between the first and second support levels of the Schiff pitchfork. It is also slightly above the 25-day and 15-day exponential moving averages. It has also moved below the 15-day and 25-day exponential moving averages. Also, it is falling after it formed a bearish flag that is shown in pink.
Therefore, I suspect that the price will continue falling in the near term as bears target $22. This trend will be confirmed once the price moves below the second support of the pitchfork. On the other hand, a move above the first support at $$25.30 will invalidate this trend.