Mexico’s Recent Mine Shutdown Will Limit Silver 1 OZ 999 NY (XAG=X) Supply
Yesterday’s strength has turned into a test of a key resistance level near the 20 EMA at $14.60. At this point, the attempt to breach the resistance was unsuccessful, but silver may make an attempt to get through the key resistance level in the near term.
The U.S. dollar dynamics are not helpful for precious metal upside since the U.S. Dollar Index has breached the psychologically important 100 level and continues its upside move.
The U.S. dollar is gaining ground against a broad basket of currencies as investors increase their purchases of safe haven assets due to continued problems on the coronavirus front.
The total number of registered coronavirus cases in the world has breached the 1 million mark, while the real number of coronavirus cases could be much bigger as testing is insufficient even in the most developed countries.
It remains to be seen whether silver will see a boost if the global markets experience a sell-off due to coronavirus worries. Industrial demand is a major part of the demand for silver so the current economic problems will surely hurt silver demand.
On the other hand, silver mines are not immune from virus containment measures, so silver supply gets hurt as well. Mexico has implemented lockdown measures and the country’s mines had to shut down since they were marked as non-essential operations.
Mexico is the world leader in silver production so the lockdown in this country will have a significant impact on silver supply. This is certainly a bullish development for silver.
Silver tries to get through the major resistance level near the 20 EMA at $14.60. In my opinion, the move past this level would trigger rapid upside since it is highly likely that many traders have tried to short silver near recent highs, and they’ll exit their positions once this key level is breached.
In this scenario, silver will have a good chance to head towards the 50 EMA which is currently located at $15.75.
On the support side, the $13.80 – $14.00 area remains the major support level for silver. The breach of this level will signal the end of the current upside trend.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 15.35.
The projected upper bound is: 15.71.
The projected lower bound is: 12.92.
The projected closing price is: 14.32.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 25 white candles and 25 black candles.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
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 63.5653. This is not an overbought or oversold reading. The last signal was a sell 3 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 44.19. 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 buy 8 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 66. This is not a topping or bottoming area. The last signal was a buy 10 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 6 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAG= closed down -0.115 at 14.390. Volume was -0% below average (neutral) and Bollinger Bands were 157% wider than normal.
Open High Low Close Volume___
14.470 14.538 14.223 14.390 0
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 14.18 16.33 17.01
Volatility: 56 60 38
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 15.4% below its 200-period moving average and is in an downward 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 bearish on XAG= and have had this outlook for the last 25 periods.