On Thursday (June 13th), the spot silver suddenly plunged in the Asian market, and the silver price just fell to the $29.00/oz mark, and the intraday decline reached 2.4%. FXStreet analyst Christian Borjon Valencia wrote a new article analyzing the technical trends of silver price.
(Source: 24K99)
In fact, the silver price also continued the falling trend after the New York session of the Fed resolution and the speech made by Fed Chairman Powell on Wednesday.
Valencia pointed out that from the daily chart of silver, the silver price showed a double top pattern, indicating that the silver price may further decline.
After the US CPI on Wednesday, the spot silver price rose to $30.25/oz, but it fell significantly after the Fed resolution, and finally closed at $29.70/oz, with a intraday increase shrinking to 1.5%.
The Fed maintained the benchmark interest rate unchanged within the range of 5.25% -5.50% for the seventh consecutive time as expected by the market. The Fed's dot map shows that it is expected to cut interest rates only once by 2024.
In the subsequent press conference, Fed Chairman Powell said, "Still highly concerned about inflation risks. So far this year, we have no greater confidence in inflation in order to cut interest rates. If the economy remains stable and inflation continues, we are prepared to maintain interest rates unchanged in appropriate circumstances."
Powell reiterated that although the inflation rate has fallen sharply from its high point, it is still too high, and emphasized that this year's inflation data has not made the Fed "more confident" to approach the 2% target. The Fed still maintains its tight monetary policy stance.
Powell said, "We think today's report made progress and enhanced confidence. But we believe we do not have enough confidence to start relaxation policy yet. We need more confidence and more good inflation data, but we will not explicitly state how much more is needed to start cutting interest rates."
What will happen to silver after the plunge?
Valencia stated that the double top pattern of silver is still valid, indicating that the silver price may further decline. After falling below the low point of May 24th of $30.05/oz, the double top pattern of silver was confirmed.
Valencia pointed out that once the silver price falls below the first support of $29.00/oz, the silver price may further drop to the high point of May 18th, 2021 of $28.74/oz, and then the short position will target the high point of June 10th, 2021 of $28.34/oz.
If the silver price falls below the above levels, then the final target will be the double top target of $27.80/oz.
(Daily chart of spot silver, source: FXStreet)
On the other hand, Valencia added that if the silver price rebounds and closes above $29.00/oz, the silver price may challenge the resistance level of $30.05/oz (the low point of May 24th).
At 09:13 Beijing time, the spot silver was quoted at $29.00/oz.