Watch Silver’s Breakout Potential, Says This Analyst
(Kitco News) - Silver’s rally this week could be big enough to trigger a price breakout, according to one market analyst.
Silver is having a great week after hitting a 2.5-month high on Wednesday. The following day, prices remained steady, with May Comex silver last at $17.24 an ounce, down 0.08% on the day.
“Yesterday’s surge in silver finally sprung it free from the congestion it was caught in for the past couple of months and suddenly brings to light the prospects of an important long-term breakout,” Paul Robinson said in a DailyFX post published on Thursday. “There is still some work to be done, but a weekly close above $17.70 will have silver trading out in ‘open space’.”
Silver has been missing out on a lot of the positive price action lately, said Robinson, adding that this surpassed trend could intensify this week’s rally even further.
“The coiling price action over the past couple of years could lead to a strong move,” he wrote. “Furthermore, large speculators in the futures market have given up on the precious metal in recent weeks by turning from net-long to net-short for the first time since 2003.”
Robinson is not the only one to call for a big move in silver. Goldmoney published a report on Wednesday stating the silver remains significantly undervalued and estimating that prices could soon see a more than 30% jump.
“Silver prices are trading almost 25% below the values predicted by our price model. This is the largest downside deviation we have seen in over 25 years,” Goldmoney’s VP and lead researcher Stefan Wieler said. “In order to maintain this downward pressure on silver, speculators would have to continue to sell over 500 million ounces of paper silver per year. A reversal of this positioning could lead a >30% rally in silver prices in our view.”
Also, Kitco’s senior technical analyst Jim Wyckoff said that current technical positioning in silver favors the bulls.
“Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at the January high of $17.785 an ounce,” Wyckoff said in his PM Roundup. “First resistance is seen at today’s high of $17.36 and then at $17.50. Next support is seen at today’s low of $17.09 and then at $17.00.”