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Silver had one of its best trading weeks of the year last week, as the metal tested towards the $25.00 level for the first time since August this year amidst a surge in demand for precious metals.
News about the $1 trillion plus Build Back Better plan has ignited silver prices due to the fact that silver is likely to be heavy used in some of the comments needed inside the green energy focused plan.
Silver also benefits from inflation fears. Silver is seen as a hedge against the weakening, such as gold, which also had a very strong week last week and moved towards its yearly opening price.
The price of silver is set to surge above the $25.50 level, and traders that had been betting on the shiny metal breaking out above $30.00 may finally be reward for their patience.
Technical analysis clearly shows that the path ahead if higher if the price of silver trades above the $24.10 support, which is a key breakout level for the metal. The $23.00 level is the most notable support zone below.
Looking at sentiment metrics, retail traders are once again massively stacked to the long side and believe that the shiny metal will continue to rise from here. This retail sentiment skew has been one of the reasons why the metal has struggled to rally all year, however, the metal cannot stay depressed forever in this environment.
The ActivTrader market sentiment tool shows that some 85 percent of traders are bullish towards silver right now. This is a 5 percent rise in bullish sentiment since last week.
Silver short-term Technical Analysis
The short-term technicals for silver show that a large, inverted head and shoulders pattern has been activated after the metal staged a rally back towards the $25.20 area.
According to the overall size of the typically bullish pattern silver price could be due a further $1.50 rally in the short-term. Watch out for more gains towards the $27.00 level above the $25.20 level.
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Silver Medium-term Technical Analysis
The daily time frame shows that a break above a large triangle is close to taking place. This could mean that silver is going to head much, much higher over the medium-term.
According to technical analysis silver could be headed towards the $31.50 level if bulls are able to hold the price above the $26.50 level. A break above the top of the triangle would be huge for silver bulls.
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