The price of silver tested towards the $27.00 level for the first-time in eight-week as traders piled back into precious in early-week trade, with silver and gold enjoying strong demand at the start of the new trading month.
Silver futures data in July has also seen a big shift, with futures trading around the $28.00 level. Typically, the futures market is the tail that wags the dog. Even though the spot market is bigger, the futures markets is known to be more accurate in terms of their price expectations.
Physical demand data this week also showed a four percent uptick for silver, which underpins the notion that silver safe-haven demand, and indeed factory demand for the shiny-metal remains alive and well.
The notion that the reflation trade is back-on-track is also bullish for the price of silver and other precious metals. Numerous raw commodities are exploding to the upside at the moment, including tin, lumber, grains, and coffee.
Furthermore, a drop in COVID-19 cases in the USA suggests that the pandemic is bullish for silver, and bullish for the global economy. All the stated reasons all lend credible reasons while silver prices are rallying.
The technicals clearly show that the price of silver has held a bullish bias over recent weeks after holding above its 200-day moving average, despite numerous attempts by bears to breach this key technical metric.
According to the ActivTrader Market Sentiment tool traders are still euphoric towards the price of silver, with some 79 percent of traders still betting that the shiny metal has further upside ahead. Typically, retail traders are on the wrong side of the trade and have poor market timing when trends start to form. However, they have been on the right side of the trade so far.
Another habit that retail traders have is exiting winning positions too early. If we start to see silver holding onto its gains and silver advancing, this could mean silver has more strong gains ahead.
Silver short-term Technical Analysis
The short-term technicals for silver show that a complex inverted head and shoulders pattern has been activated during the recent price advance.
Bulls now need to hold the price of silver above the $26.60 resistance level to keep the inverted head and shoulders pattern in play. The $30.00 resistance level is the upside target of the bullish price pattern.
Silver Medium-term Technical Analysis
A large, inverted head and shoulders pattern remains the central feature across the daily time frame. A break above the $30.00 level is now needed to ignite the pattern, which holds a $10.00 upside projection.
Buying price dips towards the $27.00 level appears to be the best strategy right now as the bullish pattern continue to develop.
Overall, pay close attention this large pattern over the coming days as silver could go parabolic once the price crosses above the $30.00 benchmark level.