Silver heads back to daily lows at $24.20 as US Dollar picks up

Wednesday has been a choppy day for Silver (XAG/USD), the precious metal swinging between gains and losses. XAG/USD has been on the back foot in recent trade, amid a bout of risk-off driven USD strength (US stocks sold off into the US cash equity close after New York announced the closure of schools to contain Covid-19), reversing an early-US session spike to $24.70 to trade closer to lows of the day at $24.20. Silver currently trades in the $24.30s, with losses of around 15 cents or 0.6%.

Silver breakout likely as prices consolidate with tight pennant

Since 4 November, Silver prices have seen considerable volatility but have in recent days shown considerable consolidation. XAG/USD now looks to have formed a pennant structure, with prices being squeezed to the downside by an upwards trendline linking the 3, 9, 11 and now 18 November lows and to the upside by a downwards trendline linking the 8, 9, 16 and 18 November highs.

Further contributing to recent consolidation is the fact that silver prices have spent most of the last 36 hours trading between its 21 and 50DMAs at $24.38 and $24.61 respectively, although prices have slipped back below the 21DMA in recent trade.

Such pennants are subject to breakouts, with an upside break being signalled by a move above the 50DMA and $24.60 mark and a downside break being signalled by a move below Wednesday’s lows at the $24.20 mark.

In the downside scenario, the next levels of support in focus will be the 11, 9 then 3 November lows at $23.75, $23.60 and then $23.22 respectively, followed by the October low at $22.60. In the upside break scenario, the levels of resistance in focus will be the psychological $25.00 and accompanying 16 November high, followed by the November high at just above $26.00.

XAG/USD one-hour chart