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by Fawad Razaqzada
Silver looks ready to break higher again after its recent consolidation inside a falling wedge pattern.
Position: N/A
Fawad Razaqzada
Fawad Razaqzada is an experienced analyst and economist having been involved in the financial markets since 2010 working for leading global FX and CFD brokerages. Having graduated with a degree in economics and leveraging years of financial market experience, Fawad provides retail and professional traders worldwide with succinct fundamental & technical analysis. In addition, he also offers premium trade signals to subscribers, and trading education to help shorten the learning curves of developing traders. He has also been trading on his personal account for many years. Follow Fawad on twitter @Trader_F_R or visit his website at TradingCandles.com.
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WEDGE FORMATIONS
Silver Lining For Metals On Coronavirus Outbreak As Yields Decline
02/13/20 03:53:42 PMby Fawad Razaqzada
Silver looks ready to break higher again after its recent consolidation inside a falling wedge pattern.
Position: N/A
| The price of gold and silver have found renewed support recently as equity markets struggled to make further ground into record levels. Demand for safe-haven metals have risen on concerns over the economic impact of the deadly coronavirus outbreak in China. |
| The World Health Organization has stopped short of declaring a global emergency over the outbreak, but hinted it may do so if the situation gets worse. Credit rating agency S&P Global Ratings has warned that if the situation worsened considerably, it could knock 1.2 percentage points off China's GDP this year. However, it is still early and not many people are preparing for the worst. |
| Meanwhile, speculation is growing that the Federal Reserve will maintain its pause on interest rates throughout this year after three cuts in 2019. This is reflected in the dollar struggling over the past few months, even if it has recovered somewhat more recently against the likes of the euro and pound. But more to the point, it is bond yields which have caught my attention. They have started to fall back again as investors continue to price out further policy tightening from major central banks. In fact, the 10-year US bond yield appears poised to nosedive again after breaking its bearish trend line. As things stand, it looks like it will head towards the low of 1.428 it hit last year. |
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| Figure 1. US 10-year bond yields. |
| Graphic provided by: TradingView. |
| |
| If yields continue to weaken, then this will be good news for low-yielding and noninterest-bearing assets such as gold and silver. Silver is actually looking constructive from a technical stand point. The grey metal has been consolidating inside a falling wedge bullish continuation pattern over the past several weeks. Previously, it had broken out of a larger wedge pattern just before the end of last year. It looks like the bullish trend is about to resume. |
|
| Figure 2. Silver Daily Chart. |
| Graphic provided by: TradingView. |
| |
| Given the above fundamental considerations, and the bullish technical backdrop, I continue to expect silver will reach $20 in the not-too-distant future. However, it has some work to do to get there. Resistance at $18.17 must break first, which is needed in order for price to form its first minor higher high. Thereafter, silver will need to break last year's high at just below $19.00. If there is acceptance above this level then the metal could embark on a rally towards that $20 level. |
Fawad Razaqzada is an experienced analyst and economist having been involved in the financial markets since 2010 working for leading global FX and CFD brokerages. Having graduated with a degree in economics and leveraging years of financial market experience, Fawad provides retail and professional traders worldwide with succinct fundamental & technical analysis. In addition, he also offers premium trade signals to subscribers, and trading education to help shorten the learning curves of developing traders. He has also been trading on his personal account for many years. Follow Fawad on twitter @Trader_F_R or visit his website at TradingCandles.com.
| Title: | Financial Market Analyst |
| Company: | TradingCandles.com |
| London, | |
| Website: | tradingcandles.com |
| E-mail address: | fawad.razaqzada@hotmail.co.uk |
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Date: 02/15/20Rank: 4Comment:
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