- Silver price breakout testing confluence up-trend resistance- longs vulnerable sub-18.65
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Silver prices have surged nearly 30% of the May lows with the breakout now probing a critical resistance confluence at fresh two-year highs. These are the updated targets and invalidation levels that matter on the XAG/USD weekly price chart heading into the close of August trade. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Silver price setup and more.
Silver Price Chart - XAG/USD Weekly
Chart Prepared by Michael Boutros, Technical Strategist; Silver on Tradingview
Notes: In my previous Silver Price Weekly Outlook we noted that XAG/USD was “approaching the first major resistance hurdle at 16.61/66 – a breach / weekly close above is needed to keep the long-bias viable targeting 17 and beyond.” A topside breach two weeks later fueled the next leg higher in price with silver now probing a more significant resistance confluence at 18.37 (high registered at 18.50 before pulling back). This region is defined by the 61.8% retracement of the 2016 decline with the upper parallel of the ascending pitchfork formation we’ve been tracking off the 2018 low - just higher.
A topside breach / weekly close above the 2017 swing high at 18.65 is needed to validate a breakout with such a scenario keeping the focus on subsequent topside resistance objectives at the 19-handle and the 76.4% retracement at 19.42. Initial weekly support now back at the 75% parallel (currently ~17.70s) backed b 17.52. Broader bullish invalidation now raised to 16.61/66.
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Bottom line: Silver prices are testing uptrend resistance around 18.37/65 - a breach / close above this region is needed to keep the broader long-bias viable. From a trading standpoint, a good zone to reduce long-exposure / raise protective stops – look for evidence of price exhaustion up here. Ultimately, a larger decline may offer more favorable long-entries closer to trend support. I’ll publish an updated Silver Price Outlook once we get further clarity on the near-term technical levels in XAG/USD.
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Silver Trader Sentiment - XAG/USD
- A summary of IG Client Sentiment shows traders are net-long Silver (XAG/USD) - the ratio stands at +4.39 (81.4% of traders are long) – bearish reading
- Long positions are 2.2% lower than yesterday and 3.1% lower from last week
- Short positions are 18.6% higher than yesterday and 63.9% 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. Recent changes in sentiment 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!
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Previous Weekly Technical Charts
--- Written by Michael Boutros, Technical Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex
