Silver broke above a broadening triangle pattern on August 20, clearing the $66.58 level on a noticeable increase in volume. The move follows the US Treasury's decision to double long-term bond buybacks, a step that has pulled down longer-dated yields and lifted the appeal of silver and other non-yielding metals.
Silver broke above a broadening triangle pattern on August 20, clearing the top of the formation on a noticeable increase in volume compared with the prior consolidation bars. The breakout extends an uptrend that has been running on the four-hour chart since July 17.
Treasury buyback plan pulls down yields
On August 19, the US Treasury announced it would double the volume of long-term government bond buybacks. The measure is part of a broader effort to contain pressure on long-term borrowing costs, alongside market interventions and calls for the Federal Reserve to expand the limits of the FIMA repo facility. As a result, yields at the longer end of the curve declined, and lower yields improve the relative appeal of silver, which does not generate interest income.
Industrial demand adds a further layer of support. Chinese imports of silver-containing ores rose 62.5% year-on-year in June, amid expanding production of solar panels and power-grid equipment.
Triangle breakout targets $69.74
Silver moved above the profile's upper boundary at $66.58 after the breakout. If the bullish momentum persists, the next major upside reference is the resistance level at $69.74.
A return inside the profile would shift attention to the Point of Control at $65.165 and the lower profile boundary at $64.345. If sellers push through that cluster, the next potential support sits around $62.700.
The RSI and moving-average indicator currently reads 66, 56 and 56, with the oscillator above the neutral zone while both moving averages sit below its upper boundary and are only beginning to approach a potential breakout.
Holding above $66.58 would favor a continuation toward $69.74. The broader outlook will also stay sensitive to the direction of Treasury yields: a continued decline could give silver further support, while a renewed rise in long-term yields could limit the metal's upside.
Source: ActionForex
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