Silver Prices: Lower High Set to Develop, Short-term Chart in Focus
- Silver prices anticipated to move lower
- Lower parallel and recent low act as confirmation
- Upon a breakdown, looking for 16.70 to 16.90 area
The strong reversal day on Thursday from resistance was in line with our analysis suggesting a decline was on the way. The bounce on Friday came from the lower parallel extending back to the beginning of the month. We noted the importance of this line due to how well the upper parallel held as support once it was breached on June 8. Silver has made several attempts to push below since Thursday, thus far it has held, but barely so as it continues to come under siege.
Due to the rejection at resistance on Thursday we anticipate the lower parallel will break and a lower low below 17.13 will soon unfold. Traders will likely be best served by waiting for a confirmation of a lower high on a break of support, while aggressive traders who have already sold into recent strength may look to add on a breakdown, assuming the total position size fits within overall risk parameters.
Given the length of the first downdraft from the 17.80s, the next leg is anticipated to carry lower towards the 16.70 to 16.90 area of support created back during April and May. At this time, it would require a strong break above 18 to take the current bearish bias off the table.
Silver 2-hr (Daily)
Traders need to be cognizant of this week’s ‘Brexit’ vote and results on June 23/24. Obviously, the most extreme volatility will be in markets at the epicenter – UK markets/GBP – but those shockwaves will reverberate outward towards other markets, precious metals included.
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