Silver Prices Stuck in a Range With No Direction…Yet

Silver price
Silver price

Silver prices continue to remain stuck in a tight range as various data that showcase manufacturing and factory activity continue to disappoint. Today’s slump in the Dallas Fed Manufacturing Index to an all-time low of -73.7 is another reason why the recovery in silver prices continues to find it hard to break the $16 barrier on the XAGUSD. 

In the last week, prices have struggled against weak PMI data from Europe, the UK and the US, as well as a drop in the durable goods orders. With depressed manufacturing activity, utilization of silver continues to remain at some of the lowest levels seen in years. 

Silver is currently trading at 15.16, or 0.26% lower in yet another day of trading that has formed a Doji candle, with shallow volumes. 

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Technical Outlook for Silver Prices

The latest data from the CME Group indicates that volumes for silver futures have declined steeply, from 39,185 contracts in May 2020 contract to a mere 544 contracts for the December 2020 contract. Open interest for the July 2020 contract is four times the May 2020 contract but has also declined sharply as deals up to December 2020 are listed. 

The data is an indication of the medium-term outlook for silver prices. The coronavirus pandemic may be with us for several months to come, and with it comes a lack of sufficient factory activity that will create a demand for silver to boost prices. In the medium-term, silver prices may, therefore, remain muted. 

On the short-term chart, we see silver trading in a price range that has the 15.49 resistance as the ceiling and 14.97 as the floor. The price candle rests on both the 5-EMA and 9-EMA lines, which are presently in a horizontal orientation. 

Therefore, we can expect the cross of the moving averages to point towards the direction which silver prices will assume next. A cross that takes silver prices above 15.49 in a breakout fashion targets 15.99, with 16.56 waiting in the wings as a further resistance target. 

On the flip side, a breakdown of 14.97 opens the door towards 14.31, with 13.96 waiting in the wings as a lower support target if 14.31 fails to hold sellers back. 

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