What’s inside:
- Silver fake-out breakdowns from triangle formations made recent trading tough
- Struggling with 19.20s short-term
- Broad and short-term technical considerations
On Friday, when we last discussed silver prices, we were focusing on the enlarging triangle formation which earlier last week provided a false signal. We had this to say – “The development and eventual break of triangles can be tricky at times” – and so it was, as another breakout from the formation led to a second false break a couple of days later. That can be the perils of trading these volatility-born patterns; triangles almost always lead to an expansion in volatility, but it doesn’t necessarily mean the volatility will be trader friendly.
Triangle fake-out, breakouts (volatility rises, but not trader friendly)
Moving on to the current situation – from a broad standpoint – volatility is contracting above significant long-term support in the 18s, with price action working its way towards the development of a triangle. Time will be needed before we can draw concrete conclusions, but it’s in the works.
Taking a look at the short-term chart, silver is once again pitted up against resistance in the 19.20s. This is an area which goes back more than three months, and once acted as support until it was broken and tested as resistance earlier this month. Yesterday and this morning, so far, silver is struggling to climb above. As long as the ceiling remains in place, then the bias in the short-run is skewed neutral to negative. It will require a recapture of old support/new resistance before our bias can turn to the upside.
A turn lower from the 19.20s will bring our attention to the trend-line off the 8/29 swing low, Friday low of 18.63, and then the August low at 18.37. If silver can manage to push convincingly through resistance, then the top-side trend-line running back to the 7/4 spike-top and 9/6 high at 20.11 will come into focus.
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---Written by Paul Robinson, Market Analyst
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