- Silver prices rally to fresh yearly highs vulnerable into 18.04 - Constructive above 17.39
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Silver prices have surged to fresh yearly highs with XAG/USD rallying six of the past seven weeks. These are the updated targets and invalidation levels that matter on the XAG/USD charts heading into the close of the week. Review this week's Strategy Webinar for an in-depth breakdown of this silver price setup and more.
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Silver Price Chart – XAG/USD DailyChart
Prepared by Michael Boutros, Technical Strategist; Silver (XAG/USD) on Tradingview
Technical Outlook: In my last Silver Price Outlook we noted that XAG/USD was, “testing confluence uptrend resistance here and leaves the long-bias vulnerable while below the upper parallel.” Prices pulled back nearly 3% last week before stabilizing with the subsequent breakout taking Silver to fresh 20-month highs. The advance hit initial resistance objectives at 17.74 today after gapping higher into the open with the daily chart highlighting ongoing momentum divergence into these highs- risk for topside exhaustion is mounting.
A breach higher from here exposes channel resistance / the 1.618% extension of the November advance at 18.04 backed closely by the 61.8% retracement / August 2016 swing low at 18.37/40. Daily support rests at 16.95 with a broader bullish invalidation now raised to 16.61.
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Silver Price Chart – XAG/USD 120min
Chart Prepared by Michael Boutros, Technical Strategist; Silver (XAG/USD) on Tradingview
Notes: A closer look at silver price action shows XAG/USD continuing to trade within the confines of ascending pitchfork formation extending off the late-June / July lows. The weekly opening-range is taking shape just below the 17.74 resistance target with initial support eyed at 17.52. Look for losses to be limited to the median-line / Friday’s close at 17.39 IF prices are indeed heading higher on this stretch.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Bottom line: The Silver price breakout is maturing at fresh yearly highs and while the broader outlook remains constructive, the advance may be vulnerable near-term on the back of this three-week advance. From at trading standpoint, a good place to raise protective stops- look to reduce long-exposure on a stretch towards slope resistance- expect a bigger reaction there IF reached. Be on the lookout for possible downside exhaustion ahead of the Friday close to keep the immediate long-bias viable. Review my latest Silver Weekly Price Outlook for a longer-term look at the technical trading levels for GBP/USD heading.
Silver Trader Sentiment (XAG/USD)
- A summary of IG Client Sentiment shows traders are net-long Silver - the ratio stands at +5.85 (85.4% of traders are long) – bearish reading
- The percentage of traders net-long is now its lowest since July 26th
- Long positions are 1.0% lower than yesterday and 1.9% lower from last week
- Short positions are 10.0% higher than yesterday and 12.8% higher from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Spot Silver prices may continue to fall. Yet traders are less net-long than yesterday & compared with last week. From a sentiment standpoint, the recent changes in positioning warn that the current Spot Silver price trend may soon reverse higher despite the fact traders remain net-long.
See how shifts in Silver retail positioning are impacting trend- Learn more about sentiment!
Active Trade Setups
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- US Dollar Price Outlook: DXY Threatens Larger Recovery– Trade Targets
- Written by Michael Boutros, Currency Strategist with DailyFX
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