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TECHNICAL ANALYSIS


Silver Breaks Out As Yields Dip

04/15/21 02:22:12 PM
by Fawad Razaqzada

Is THIS the start of another major rally for silver after a lengthy consolidation?

Security:   Silver
Position:   N/A

After spending several months in consolidation, silver has broken out to the upside. Let's see if the precious metal will now stage another major rally, or whether this is yet another fakeout.

In the last couple of weeks, we have had lots of good news from the US economy. These include: a big jobs number, stronger CPI data and, not to mention, the blowout retail sales figure. Bank earnings have all topped expectations. Yet, despite all of this, US bond yields have fallen, pushing the dollar down.

Figure 1. Daily chart of US Govt Bonds 10-yr yield.
Graphic provided by: TradingView.
 
So, it looks like investors are not too worried about the prospects of inflation overshooting.

With yields breaking lower, demand for low- and non-interest-bearing assets have risen. Gold and silver have both shot higher in recent days, while in FX the likes of the euro and yen have made good progress against the US dollar. Equity indices have repeatedly hit clear blue skies in the US, while in Europe the major indices have also climbed sharply higher. Whether or not this trend will continue remains to be seen.

Now from a technical point of view, silver's rally has resolved the lengthy consolidation from THIS falling wedge pattern seen in Figure 2.

Figure 2. Daily chart for Silver Futures.
Graphic provided by: TradingView.
 
The falling wedge is a bullish continuation pattern, and so with silver breaking out of it, this is technically a very nice bullish development.

If the breakout can hold, then silver could climb towards $27 initially, ahead of $28.40 next, and possibly $30 thereafter.



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.

Title: Financial Market Analyst
Company: TradingCandles.com
London,
Website: tradingcandles.com
E-mail address: fawad.razaqzada@hotmail.co.uk

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