Silver prices are under this pressure after cracking the $20.00 support level, amidst an increased risk-off environment and a complete lack of regard for the inflationary backdrop, where precious metals usually thrive.
We also have to factor in the demand story. Copper prices are also failing. The red metal is often considered a bellwether for the economy. Silver is in a similar position in terms of demand, due to its use as an industrial metal.
Also pressuring silver lower is gold, which is often known as the yellow metal. Gold hit a five-month low this week, forcing the price of silver, also known as the shiny metal, to a two-year low.
Metals are feeling the pressure of a stronger US dollar index that is back near its recent 20-year high and from near-term charts is seems like the upside in DXY could just be warming up.
In my opinion the downside could just be beginning if the price remains under the $20.00 level. We could probably see $18.50 and even $17.00 follow due to the worsens technicals.
Current sentiment metric towards silver show that traders remain overly bullish towards the price of silver. The ActivTrader market sentiment tool shows that 90 percent of traders are bullish towards silver.
With this increasing and strong one-way sentiment bias it is not bullish for silver price as retail are heavily leaning on the buy side, which could hint at more steep losses under $20.00 for silver price ahead.
Silver short-term Technical Analysis
The short-term technicals for the shiny-metal shows that a bearish breakout from a head and shoulders pattern has taken place, and that silver is still bearish over the short-term horizon.
Looking more closely at the neckline break, we could probably expect more downside towards the $18.50 area. If silver price break $18.50 then more downside towards $17.70 should be expected.
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Silver Medium-term Technical Analysis
The daily chart shows that silver only remains very bearish while trading below a key triangle pattern, which the shiny metal has been trapped in during much of its multi-year bull cycle.
The clearly visible triangle pattern breakout on the daily time frame indicates that we should probably expect a $5.00 decline at some point over the medium-term, based on the size of the pattern.
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