Gold Rally Lifts Silver 1 OZ 999 NY (XAG=X) Prices
It has been an excellent week for silver, as the metal has gained an impressive 4.5% this week. This is shaping up to be silver’s strongest week since the last week in August, when silver jumped 5.3%.
The coronavirus, which shows no signs of being contained, continues to chill investor risk appetite. The outbreak has caused havoc in the Chinese economy, and this week’s warning from Apple that it would fall short of its revenue forecast due to the disruption of its Chinese production facilities. The disruption to supply-chains is also affecting other multinationals with operations in China.
Nervous investors have responded by snapping up precious metals, with gold prices gaining 3.1% this week. In Friday’s Asian session, gold touched a daily high of 1636.59, its highest level since March 2013. The gold rally has dragged silver with it, as silver prices are at their highest since January 8.
Fed Calls Coronavirus Global Risk
The Federal Reserve minutes, released earlier this week, took note of the coronavirus outbreak. Policymakers highlighted the significant risk posed by the coronavirus, stating that “the threat of the coronavirus, in addition to its human toll, had emerged as a new risk to the global growth outlook, which participants agreed warranted close watching.” Policymakers also said that the outbreak has dampened investor sentiment. This warning from the Fed underscores the threat that coronavirus poses to the global economy, which will likely put upward pressure on silver prices until the outbreak is contained.
Silver Technical Analysis
This week’s silver rally distance has seen the metal put more distance between itself and the key 18.00 level. The resistance line of 18.60 is under strong pressure and could be tested on Friday. This would be a significant development, as this line was last tested in resistance in late September.
On the downside, we find support at the 18.00 line. Below, the 50-day EMA is currently situated at 17.79, followed by support at 17.50.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 17.70.
The projected upper bound is: 19.07.
The projected lower bound is: 17.92.
The projected closing price is: 18.49.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 31 white candles and 18 black candles for a net of 13 white candles.
An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend. It then signifies that the momentum may be shifting from the bears to the bulls.
If the engulfing bullish pattern occurs during an uptrend (which appears to be the case with PREC.M.XAG=), it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 88.8570. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 27 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 64.07. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 32 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 163.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 6 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 3 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAG= closed up 0.111 at 18.463. Volume was -0% below average (neutral) and Bollinger Bands were 10% wider than normal.
Open High Low Close Volume___
18.349 18.625 18.320 18.463 0
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 17.93 17.78 16.93
Volatility: 17 21 25
Volume: 0 0 0
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
PREC.M.XAG= is currently 9.0% above its 200-period moving average and is in an upward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect very strong flows of volume into XAG= (bullish). Our trend forecasting oscillators are currently bullish on XAG= and have had this outlook for the last 1 periods.