Silver Price Continues Higher in Channel, Has Eyes for April Highs
- Silver price continues to ride higher within confines of a bullish channel
- It may pull back to alleviate short-term overbought conditions, but as long as the lower parallel holds…
- USD may find support here soon, but it may have minimal impact; sticking to technicals in precious metals as the main guide
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Silver remains trading within the confines of a bullish channel created after bottoming in July. Gold has been using a similar channel but has been the stronger of the two metals and is currently beyond the upper confines of it channel. Silver’s move above the July 2016 trend-line furthered it along with a resulting break above the June high at 17.74. Resistance has come and gone quickly, it’s been a healthy trend to be certain.
From here a pullback could develop off the upper parallel of the channel and alleviate short-term overbought conditions, but as long as the lower parallel holds then the broader outlook remains positive. The first support level to look to on a decline before reaching the lower parallel arrives at the June high (old resistance becomes new support).
On Monday, we took a look at the relationship between precious metals (namely gold) and the US dollar. The US Dollar Index (DXY) is currently trading just a hair beneath the low-end of the long-term support zone, but given it goes back to 1998 we’ll give it a little room before calling it a full break. A tradable low still looks to possibly be nearing. But even if this is the case, precious metals can still rally despite the generally negative relationship between these commodities and the dollar. Trading in tandem has happened on a few occasions this year and can happen again. With that in mind, even if the dollar does find buyers, as long as we see constructive price action in silver (& gold) the bias will be for higher prices. Again, we’ll continue to use the rising channel as our guide for as long as it lasts.
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---Written by Paul Robinson, Market Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.