Silver prices today are up by almost 1% mostly because of the weaker US dollar. The metal is trading at $24, which is significantly lower than this year’s high of $29.77. Gold is up by 0.25% while the price of copper has fallen by 0.10%.
The price of silver reached a high of $29.77 in August. Since then, the price has struggled for direction, and in September, it reached a low of $21.72.
There are several reasons for this price action. First, silver usually has a inverse relationship with the US dollar. This is because most of the mined metal is traded in dollars. Now, the greenback rose by 2% in September, leading the metal to slide.
Second, the price has wavered because of the rising number of COVID-19 in most countries. Among the most countries affected are the United States, Canada, Spain, and the United Kingdom. This situation affects silver demand because of its industrial role.
Third, silver prices have been moving sideways because of technical reasons. In most periods, when the price reaches a major resistance, it tends to waver or stall because of the indecision between bulls and bears.
Meanwhile, talks of stimulus in the United States has also played a role. A stimulus would lead to more demand for the metal and also pull the dollar lower.
So, what next for the price of silver?
Silver prices today technical forecast
The daily chart shows that silver reached a high of $29.77 in August. It then declined and reached a low of $21.72, which is slightly below the 38.2% Fibonacci retracement level. It is now slightly below the 25-day and 15-day EMA. Now, the price seems to have formed a bearish flag pattern, which is usually a bearish continuation pattern.
Therefore, although I expect the price will remain within this narrow range today, there is a possibility that the next break-out will be bearish. If this happens, the price will drop to the 50% retracement at $20.
On the other hand, a clean break above the resistance level of $25 will invalidate this thesis. This price is along the 23.6% retracement level. As such, a move above it will open doors to silver rising this year’s high of $29.77.
Silver technical chart