While cryptocurrencies, tech stocks, and many commodities have gone ballistic in the past year, silver has been completely flat as it bounces within an $8 range between $22 per ounce and $30 per ounce. Silver’s lackluster performance of the past year has certainly been puzzling in light of rapidly increasing inflation expectations (historically, silver and gold have acted as inflation hedges). Though silver has been a sleeper lately, an analysis of the technicals shows that silver may actually be gearing up for a sharp move in one direction or another.
Since last summer, silver has been trading in a range between $22 per ounce and $30 per ounce. When silver is finally able to break out of this trading range in a convincing manner, things may get interesting once again. If silver breaks below its $22 support level, that would indicate a higher likelihood of a sharp bearish move. Alternatively, if silver is able to push above its $30 resistance level, that increases the probability of a strong upward move.
Daily silver chart
Finviz.com
Silver’s weekly chart puts the past year’s $8 dollar trading range into better perspective:
Weekly silver chart
Finviz.com
The monthly silver chart shows the $22 to $30 trading range along with other likely resistance levels at $35, $45, and $50 that formed at prior peaks in 2011 and 2012. If silver can close above $30 in a convincing manner, the next price target to watch is $35 and so on.
Monthly silver chart
Finviz.com
As I’ve explained earlier this year, I am waiting to see which direction silver breaks out. I am bullish on gold and silver in the long run due to my belief that global central banks and governments will continue to aggressively print money and rack up debt, but I respect the technicals (i.e., charts and other market data) when it comes to analyzing and deciphering short-term moves.
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