Silver Prices Higher As Coronavirus Impact Triggers Safe-Haven Demand
Silver price action in the last two days has been quite bullish, completing one half of the time filter required to confirm the breakout of the bullish flag pattern on the daily chart. Silver price is benefitting from the market uncertainty created by the announcement by Apple that the coronavirus outbreak could impact its Q2 2020 earnings guidance negatively.
This announcement spooked the stock market yesterday, and despite today’s recovery, investors are quite wary about the future of many companies exposed to the Chinese economy. In other words, the end of the coronavirus outbreak may be the beginning of the market’s woes. The impact of the coronavirus shut-ins could be felt long after the outbreak is contained. This scenario could be worrisome to investors, which may explain the flight to safe-haven assets such as gold, silver and palladium.
Silver price action on XAGUSD is now trading at 18.21798, after yesterday’s daily candle closed at 18.17040, well above the resistance at 18.1468. This candle close also cleared the upper boundary of the bullish flag with a lot to spare. Markets now await the second half of the time filter confirmation: a second close above the resistance borders mentioned above.
Successful confirmation of the breakout leaves a lot of room for silver price to express itself to the upside, with a potential target at 18.65367. 19.27328 is also a potential resistance target, but this would require silver prices to surpass the measured move from the flag break to be achieved.
On the flip side, failure to confirm the breakout using the time filter may allow for a pullback to the broken flag border, where silver prices may find renewed support for another attempt to the upside. 17.79883 is the support line which is expected to intersect the bullish flag’s upper boundary sometime in the next week or two, making this price level the possible reference spot for pullback support to occur.