Silver May Be Carving Out a Major ‘Head & Shoulders’ Pattern
Silver prices remain trapped between $15.11 and $15.46, and a break to this range is needed for momentum to pick up.
A break to $15.46, which is the upper limit of the current range may potentially open for a rally to the February 12 high of 15.79, while a breach to the lower limit of $15.11 may trigger a decline to the February 8 low of $1.49. U.S. Industrial Production and today’s FOMC Minutes are likely triggers. See our economic calendar.
Head and Shoulders Pattern Suggests A Decline To $14.27
Chartists may also notice that silver prices are in the process of carving out a ‘Head and Shoulders’ pattern with the February 9 being the left shoulder, the February 16 high being the right, and the February 11 high being the head.
The $15.11 level is the ‘neckline’ and a break to this level may trigger a drop to $14.25 as it is the price target for this trading pattern. The target is based on the difference between the ‘head’ and the ‘neckline’.
Something not in favor of this scenario playing out is the overall bearish trend of stock markets, with a major rally in stocks needed to lower the demand of safe haven assets. A major bounce in the U.S. Dollar is also needed, and this is a scenario which may not happen until U.S. data turns supportive.
However, we may still have the $14.27 target in mind, if the $15.11 level gets taken out.
Silver Prices | FXCM: XAG/USD
Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano
--- Written by Alejandro Zambrano, Market Analyst for DailyFX.com
Contact and follow Alejandro on Twitter: @AlexFX00
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