Silver Runs in a Second Bearish Leg

The latest upward movement developed by Silver, triggered by the spread of the coronavirus outbreak, has been supported by institutional activity to reduce their long-side positioning.

Silver plummets on Tuesday trading session 33.2 cents or 1.84% dropping at $17.766 per ounce; Gold eases $1,575 per ounce, Copper falls 4.37 cents or 0.17% touching at $2.582 per pound.

During the past week, Silver developed a rally boosted by the increasing fear of coronavirus spread. The upward sequence drove the precious metal to climb until $18.368 per ounce last Friday 24th.

Once Silver reached $18.368 per ounce, the precious metal completed a wave "b" of Minute degree labeled in black. The second leg in progress corresponds to an Elliott wave corrective sequence that started on January 07th, 2020, when the price topped at $18.859 per ounce.

In terms of the institutional activity, in the latest CFTC report, institutional traders informed of a reduction in their long and short positions, which makes us suspect that speculative traders are taking profits.

The institutional traders positioning reveals that the speculative positions remain driven by a bullish sentiment. In the latest CFTC report, big participants informed of 73.05% on long positions.

In consequence, our main bias continues being on the long-side.

Technical Overview

Silver, in its 2-hour chart, shows an aggressive bearish movement which corresponds to a wave "c" of Minute degree labeled in black.

Currently, wave "c" is in progress and could find support in the lower-line of the descending triangle in progress. This movement should complete a wave "2" of Minor degree labeled in green. The completion of the current structure should give way to a wave "3" of Minor degree, which, in the long-term, could strike the psychological level $19 per ounce.

It is likely that in the coming sessions, the precious metal makes a modest rebound and a new lower low. In the mid-term, as long as Silver price stays above $16.531 per ounce, we will continue expecting a further upside.

In conclusion, according to the positive institutional net positioning observed from the CFTC report and the corrective structure in progress,  short-term, we maintain a slightly bearish bias. However, long-term, we continue expecting more upsides.