- Silver prices spiked on Wednesday, oscillating between gains and losses, and rebounding sharply from early European session lows of $ 24.20.
- XAG / USD has been consolidating within a pennant structure this month and appears to be subject to breakouts.
The prices of XAG / USD They spiked on Wednesday, oscillating between gains and losses, but overall they have continued to consolidate near $ 24.50, as has been the case most of the time since the start of the US session on Tuesday. The precious metal rebounded sharply from new weekly lows of around $ 24.20, set around noon London time, after Pfizer said its vaccine had shown 95% efficacy and is now trading above its moving average of 21 days (DMA) at $ 24.38 and its 50-day DMA at $ 24.62.
A continued gradual weakening in the USD that has seen the dollar index slide from weekly highs above 92.80 to current levels near 92.30, exacerbated more recently by dovish comments from the FOMC, should offer silver some future support. On the other hand, recent bouts of optimism about vaccines have proven negative for XAG / USD and may continue to be so in the future.
Silver’s likely breakout as prices consolidate into a tight pennant
Silver prices have experienced considerable volatility since November 3, but have shown considerable consolidation in recent days. XAG / USD now appears to have a pennant structure, with prices being pushed down by an ascending trend line linking the lows of 3, 9, 11 and now lows of November 18 and up by a descending trend line. which joins the highs of November 8, 9, 16 and 18.
Another factor contributing to the recent consolidation is the fact that silver prices have spent most of the last 36 hours trading between their 21 and 50 DMAs at $ 24.38 and $ 24.61, respectively.
Such pennants are subject to breakouts, with a break to the upside signaled by a move above the DMA of $ 50 and $ 24.60 and a break to the downside by a move below Wednesday’s lows of $ 24.20.
In the downside scenario, the next support levels in focus will be the lows on November 11, 9 and then November 3 at $ 23.75, $ 23.60 and then $ 23.22 respectively, followed by the October low at $ 22.60. In the upside breakout scenario, the resistance levels in focus will be $ 25.00 (psychological) and the accompanying November 16 high, followed by the November high modestly above $ 26.00.
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