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Silver price remains under significant downside pressure due to this week’s major sell-off in commodity price and to a lesser degree silver’s strong price correlation with gold, which continues to crash.
The shiny metal has recently fallen to a flash crash two-year low, hitting near $21.30 support level during today’s initial Asian session price slump. Silver reached its lowest levels since June 2020 the previous day on breaking horizontal support stretched from October 2021.
Commodity-related currencies are getting hit badly. With the Australian dollar falling, it provides a further headwind for gold. Additionally, the S&P500 recently reached a 52-week price low.
On the technical front, silver is heavily bearish and below its 200-day moving average. Additionally, and very worrying, the metals 200-week SMA level at $20.20 appears immediate danger zone.
Furthermore, the RSI and MACD indicators support further downside losses. A breach of the $20.00 psychological level could see a further slump to the 2019 high of $19.65 ahead.
Current sentiment metric towards silver show that traders remain overly bullish towards the price of silver. The ActivTrader market sentiment tool shows that 91 percent of traders are bullish towards silver.
With this increasing and strong one-way sentiment bias it is not bullish for silver price as retail have gone crazy on the buy side, and not for the first time, which could hint at more steep losses under $20.00 for silver price ahead.
Silver short-term Technical Analysis
The short-term technicals for the shiny metal shows that a technical meltdown is still ongoing, as a bearish double-top price pattern continues to play out to the downside.
Looking more closely, at a possible head and shoulders pattern on four-hour price chart has formed, and further $5.00 of losses could happen if gold stays under the $22.00 support area.
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Silver Medium-term Technical Analysis
The daily chart shows that silver only remains a strong buy while trading above the $25.00 level, which is a long way away the location of the 200-day moving average of the shiny metal.
I would expect that the price of silver falls under the 200-week MA, at $20.20 level, then a drop to $15.00 is possible. If not, we should probably expect a retest of the $22.00 resistance level at some point.
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