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Short-term Correction
Until shown otherwise, silver remains within a developing uptrend that began from the December swing low at $28.75. A series of higher swing highs and higher swing lows followed until last week. A lower swing high shows weakening demand and it is warning of a potential bearish pullback within the rising trend. The 50-Day MA at $31.25, along with a rising trendline, mark potential support for the trend.
At the end of last year silver reclaimed the 50-Day MA and it remained above the line until a successful test of support late-February. That drop to the 50-Day line established a higher swing high at $30.81, which is part of the price structure of the uptrend. It is also support for February. Therefore, it marks a key support level as a sustained decline below that swing low signals a possible bearish reversal of the current near-term bull trend.
Consolidation on Weekly Time Frame
The weekly pattern in silver shows consolidation as last week’s price range was inside the range of the previous week. Therefore, potential weekly support is at last week’s low of $31.12. Furthermore, the 200-Day MA is at $30.54 currently. It has not been tested as support since the end of last year. Nonetheless, February’s low $30.81 would be reached before the 200-Day MA and a drop below it would trigger a monthly breakdown. Moreover, February ended with a bearish shooting star candlestick pattern.
Rally Above $32.77 Needed to Confirm Strength
On the upside, a decisive rally above today’s high of $32.67 will show strength. But until last week’s high at $32.77 is exceeded, the potential for lower prices first remains. The recent February swing high at $33.39 marks potentially significant resistance given the monthly bearish candle that formed. This will make a successful test of support near the 50-Day line more significant, as a deeper pullback could trigger the long-term monthly chart.
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