Silver Price Forecast: What’s Foreshadowing Silver’s Next Move?

Silver has definitely been in the spotlight lately, namely due to the incredible #silversqueeze rally. But as of right now, there is one detail that’s pointing to silver’s next movement.

Gold moved higher yesterday (Feb. 23) and so did the rest of the precious metals sector. But as you will see below, this didn’t really change anything. And there’s one detail that actually perfectly fits this kind of movement. Let’s take look at the charts, starting with the key one – and no, it’s not the one featuring gold.

Figure 1

Despite yesterday’s (quite sharp for a daily move) upswing, the breakdown below the neck level of the broad head-and-shoulders remains intact. It wasn’t invalidated. Consequently, all its bearish implications remain up-to-date.

Having said that, let’s move to the detail that actually fits what happened yesterday (and so far today). Namely, silver is going through a triangle-vertex-based reversal at the moment.

Figure 2

Indeed, after moving slightly above yesterday’s intraday high in today’s overnight trading, silver moved back down. The move lower is not yet super significant, but given the reversal point, it could just be the beginning. Remember the triangle-vertex-based reversal at the beginning of the year? Back then, practically nobody wanted to believe that silver and the precious metals market was topping at that time. It was the truth, though. Gold and mining stocks were never higher since that time and the same thing would have most likely happened to silver if it wasn’t the #silversqueeze popularity that gave it its most recent boost.

Now, there’s also another triangle-vertex-based-reversal in a few days, and since these reversals tend to work on a near-to basis, silver might top any day now, even if it hasn’t topped earlier today.

Figure 3

The move higher in gold was notable, but nothing game changing. The last time gold moved above the declining short-term resistance line, was when it actually topped. The invalidation of the breakdown marked the start of another very short-term decline. The small decline in today’s overnight trading might be the very beginning of this invalidation that leads to another slide.

Also, you might be wondering if the decline in the USD Index made its outlook bearish.

Figure 4

In short, it didn’t. The decline is still a part of the verification of the breakout above the declining medium-term resistance line that I marked with blue (figure 4). Based on the obvious similarity to early 2018, the verification of the breakdown is likely the final step before a major rally in the USDX. This will likely translate into lower precious metals and mining stock prices, especially if the general stock market declines as well.

Summary

It appears that gold, silver, and the miners are all on the bearish track, on time and on target, while the USD is still poised for a climb. Not much has changed and it’s all pointing in one direction.

The medium-term top in the precious metals is in and the following weeks are not likely to be pleasant times for anyone who jumps on the bullish bandwagon just because prices moved higher in the previous months or based on some forum posts. Tread carefully.

What’s profitable is rarely the thing that feels good initially. As silver often moves in close relation to the yellow metal, forecasting gold’s rally without a bigger decline first is thus likely to be misleading. Silver is likely to slide as well. The times when gold is continuously trading well above the 2011 highs will come, but they are unlikely to be seen without being preceded by a sharp drop first.

Thank you for reading our free analysis today. Please note that it is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the outline of our trading strategy as gold moves lower.

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Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Sunshine Profits - Effective Investments through Diligence and Care

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All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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