Silver Price Analysis August 2020 | Correction Before Rally Continues?

by birtanpublished on October 5, 2020

The recovery in silver continued into july and in the last week uh the price went somewhat parabolic moving from 19 up to 26 and you can see the sort of volatility we had in a 24 hour period but does this suggest that actually silver has gone too far in the short term or is it just the start of a move targeting thirty dollars as uh the next objective we've been tracking this recovery in silver from um around eleven 11 an ounce back in back in um the middle of march

And you can see that the move we've had uh during july during the last couple of weeks or so that the price has punched as high as uh briefly above 26 let me just flip this to a short term chart because we had incredible volatility uh over the last few days so some crazy swings from the 24th of july when it was about 23. and then 28th of july early hours in the morning up to 26 20 and then by nine o'clock uh the same morning

Down to 22 20. so some really big swings here and as usual the question is where next um is this the sign of momentum really building with further gains to come in the short term or has it all been a bit overdone and now is the time to to maybe sit it out and wait for a correction we did have a few trays running in silver anyway uh these ended up being closed as i moved the stop up these were closed over the last 24 hours or so i think coming out for just under 1 900

Pounds so it's left us with no positions uh in silver at the moment we do have those gold trades still running so i think we need to rectify that so i'll talk about what's been driving it for a couple of minutes then we'll come back look at things in more detail and see if there's a trade uh we can set up to try and take advantage of this volatility hello i'm david jones from capital.com given the fact that the price of silver as you saw there

When i'm ballistic uh at the end of july i thought we'd do an update looking ahead into august and see well should we be buying here at the start of a bigger move higher should we be taking profits or actually is the move ever done and it's time to go short we'll cover all of this in the video as usual if you're watching this and you haven't subscribed if you could click on subscribe support the channel and we will continue to push out

Lots of uh timely content like this in the weeks ahead i'll talk about what's been driving it first then we'll go back onto the platform and look to set our trade up so let's get into it so at its peak at the time of recording uh silver had risen by a whopping 125 percent off the march low that's silver the cash price in financial markets these were the best levels uh seen for the price of silver uh since april 2013 so we've seen a seven year

Plus high for silver during july if we went back to march back then the gold silver ratio how many ounces of silver it took to buy an ounce of gold was a uh 125. given uh the bounce back the strong move in silver it's now around about 80 to 80 80 ounces of silver to buy announce of gold but historically it's been around the 60 level although 80 has been something of support uh in recent years and of course gold has been pushing out uh to fresh all-time highs in the last

Week a lot of interest in precious metals full stop and i'm sure that hasn't done any harm when it comes to sentiment towards silver silver had been strong anyway into before it really went parabolic we'd seen um expectations that the reopening of economies around the world after the coronavirus could lead to a pickup in industrial demand clearly as manufacturing all started up again plus there were also fears of shortages of silver due to

Lockdowns and mines uh not producing the us dollar uh has also been helping uh the silver bulls we've seen continued weakness in the u.s dollar uh clearly as the central bank has has stepped in the u.s federal reserve and uh to try and uh prop up the economy and get things kick-started and i think you know if as we're seeing more virus cases again coming back you know in europe we're seeing cases spiking up clearly in some states in the us uh the

Number of cases is still rising so there is this fear of this potential second wave if central bank step in again that could well put more pressure on the u.s dollar which would be good for precious metals once more the only question is and it's a really big question i think has it really overshot to the upside in the short to medium term we're going to have a look at the chart and take a look at things in more detail there and set the trade up but first of

All let's talk about the levels to watch so that high so far at the time recording as 26.20 so that's the july 2020 high uh that's the seven year plus high then we've got to go back to april 2013 the highs from back then 28 next major barrier and after that i think 30 is a psychological uh resistance barrier looking on the downside lots of recent support levels left and the most immediate these we did see a lot of volatility on the 28th of july so 22.25

Has been support but let's put some some color on these numbers let's jump on the chart look at things in more detail and see where the opportunity might be so here's our trend in silver off those march lows uh this trend line's done a great job currently coming in around uh 20 an ounce you can see you know we are somewhat overextended from the trend line it had been hugging it all the way up until about the third week of july so you could make an argument there

Well actually it's a bit overextended in the short term uh it's time to maybe wait for a dip to buy let's just see where this puts us historically so this chart starts uh june 2012 over here and you can see that that punch up to 26 announced at best levels since uh early april 2013 and after that you know perhaps 30 dollars ends up being an obstacle but if we did see further gains you know we could be targeting those october september october 2012

Highs up around 35 dollars announced so it has been a fantastic comeback since march let's go back to the dailies and plan a trade so i would like to be a buyer of silver because the trend is up uh long-term viewers will know that we always follow trends these are these bigger trends uh when we're looking at the various markets but i can't help but think in the in the short term at least you know it's a bit overcooked uh from where from where

That that trend since march has been if we look at the rsi down here not surprisingly the rsi has been overbought since early july when the price was uh about 18.70 and it's a good lesson here that if you just uh stick to following rsis you're going to miss out on some big moves the price moves nearly uh what another or 30 40 up from those levels and if we'd have been not buying because of the rsi we'd have missed out on that in strong trending markets rsis do go to an extreme

So we are still overbought on the rsi uh looking at the macd down here uh the last buy signal we had was was in early july down around 18 that sort of mark that's that's still long uh for now but what i'd like to do um because we've seen this increase in volatility over the last two or three days i do wonder is the market getting perhaps a little bit nervous after this jump up could we see a bit more volatility and could that be an advantage so let's um let's take this down to a shorter

Term chart so we're back on the hourlies now looking at the month of july i'm going to focus on the price the price action here i think that the trade i want to do um i want to take advantage of any sort of spike down in the price of silver and we did see that it was a massive swing in the early hours the 28th of july where the market moves uh well pretty much four dollars uh in a little more than six or seven hours or so so i'd like to uh

Take advantage of a price move low so what i think i'm gonna do for a short-term trade i'm going to put an order in to buy at 22.50 see if we get a re-test of that spiky low earlier this week and if that if that level gets filled at 22.50 i'm going to give the market a bit of room um i could take place a stop under here the other side of sort of 21 35 that sort of area but i think i might go uh for a stop i'll go down at at 20 25 so i'm going to be a buyer at 22.50

With a stop at 20 25 because i think if it did fall that far i'm not saying it's going to but if it did i think there'd be plenty of people looking to buy a head of 20 we have an element of the fear of missing out let me just set that order up then we'll look at things in more detail so here's the order so i want to buy 115 ounces if the price gets to 22.50 if it gets to 22.50 uh put a stop loss in at 20 25 that gives me the usual risk of a couple of hundred pounds that's what we do on these trades when we place the trades

On these videos and you can see those levels now highlighted on the chart let's put that limit order in then we'll look at things in a bit more detail so that trend that recovery is still intact um just because it's away from the trend line doesn't mean it has to go back to the trend line but i do wonder if maybe it's got a bit ahead of itself in the short term and i think it's only if we start to lose 18 to 20 dollars that sort of area does it look as if this recovery of the march loads is over so for me

Medium to longer term still bullish on silver but short term thinking perhaps we could see a bit more volatility and maybe that order will get filled at 22.50 we'll come back to it and see how it worked out that's it for this update it is going to be an interesting market to watch during august but from me davidjones and capital.com good luck with your trading for more trading videos just like this please subscribe to our channel

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