Can silver surge another 80% higher?
Silver enjoyed an incredible rally in 2020, rallying 153% from its March low to August high. While prices retraced during the August to November period, they have been pushing higher since.
In December, the weekly chart formed a bullish engulfing bar which set up a potential push upwards of nearly 34% back to its previous swing high of 29.93 made in August 2020.
While this target may suit shorter-term traders, longer-term investors may well be focused on the all-time high price level of 49.70 made in April 2011 - marking an 80% rally higher from current levels.
Source: Admiral Markets MetaTrader 5, Silver, Monthly - Data range: from Dec 1, 2005, to Jan 5, 2021, performed on Jan 5, 2021, at 7:30 pm GMT. Please note: Past performance is not a reliable indicator of future results.
The above long-term monthly chart shows a clear break from the lower horizontal line at 21.13. Now that price has strongly broken above this price level, it opens up the doorway for further upside. The all-time high is quite far off and is most likely suited for longer-term investors.
However, shorter-term traders could also capitalise on these flows by drilling down the lower timeframes. For example, the daily chart shows a clear uptrend forming with higher high and higher low cycles, as well as bullish moving average alignment with the 50-period (red), 100-period (green) and 200-period (black) exponential moving averages all pointing upwards, as shown below:
Source: Admiral Markets MetaTrader 5, Silver, Daily - Data range: from Apr 14, 2020, to Jan 5, 2021, performed on Jan 5, 2021, at 8:30 pm GMT. Please note: Past performance is not a reliable indicator of future results.
While the above daily chart shows a downwards trend from August to November 2020, the price made a double bottom price pattern at the 21.89 level which is in-between the 100-period and 200-period exponential moving averages.
Traders may look for pullbacks to the ascending trend line support shown via the black line on the chart or any of the moving averages. However, as silver is a key component in electric vehicles demand may ramp up making the trend even more aggressive, causing traders to further drill down to lower timeframes such as the four-hour chart to find potential opportunities.
- Learn more about commodity trading in the ‘How to Start Commodity Trading’ article.
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