Silver Prices Explode Higher, Top-side Levels in Sight
- Silver prices explodes above downtrend line
- Top-side resistance levels come into view
- How it reacts at resistance will be the tell on broader indications
On Tuesday, when we last examined silver we made note of quickly converging lines – a trend-line keeping price pointed lower and horizontal support – of which broke first would be the direction we would go with. Simple as that.
Yesterday, the top-side trend-line broke in early US hours, causing the initial spike higher, but later after the FOMC rate decision and policy statement was released we saw a quick jab lower followed by another explosive drive higher. Due to the distance between highly visible support and resistance ‘to our left’ it looked as though the stronger, less contended move would be to the upside. Indeed, that was the case as silver finished out the day trading up nearly 4%.
Whether this is the start of another leg higher or not, we will need to see how silver reacts upon top-side levels. It is currently squaring off with a level around 20.48, and a move beyond there brings 20.66, then 21.11 into play. A broader consolidation period on the daily could develop between the low ~19 and ~21 before moving to higher ground; we will need to see how silver handles resistance.
For now, the immediate burst higher suggests we could press on a bit higher, but need to be mindful of price action up here which may indicate a turn lower is on its way, as silver could still be undergoing a larger consolidation phase.
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---Written by Paul Robinson, Market Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.