HSBC’s chief precious metals analyst James Steel lowered his estimates for silver due to lower gold and copper prices. HSBC lowered its forecast to $22.25 an ounce for this year and $23.05 for next.
For its part, UBS (SIX:UBSG) Group expects the pale commodity to trade at $19 next year.
The price has completed a falling flag, bullish after the previous five consecutive days rise. The body of the flag is oscillating as the bulls can’t believe their good luck with the first 12% move in just five sessions in a long time.
The move included a 7% rise in one day to a monthly high on July 28 due to a tightening of shorts after the market interpreted recent comments from Federal Reserve Chairman Jerome Powell.
Investors considered that the Fed chairman’s rhetoric was vague and opened the door to a hike of only 50 basis points in September, after the central bank raised interest rates by 75 basis points in a row.
Therefore, the flagpole was the result of the squeeze of shorts. Furthermore, the bears couldn’t believe their luck and quickly locked in profits. Thus, the bears unknowingly momentarily joined forces with the bulls, creating the strong advance to the upside. However, the body of the flag is congested, showing that there is enough demand to absorb the sudden supply, even as that late-season sale pushed the range down.
Finally, the breakout to the upside shows that the market drank up all available contracts within the field, and buyers were willing to up the ante to find more demanding sellers at higher prices. The squeeze of shorts pushed the price above its falling channel in March and cut like butter through the 50 day moving average.
The implied target of the continuation pattern is the height of the flagpole, as all interest is expected to develop after the breakout. So the general expectation is that the momentum will take silver from its run of $20.22 to $22.40, $0.15 above HSBC’s target for this year. Now, let’s look at that black horizontal trend line.
Source: Ambito
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