What’s inside:
- Silver rejected on attempted break above resistance
- Multi-week upward trend still in tact
- 2-hour chart helps provide clarity, trading levels
On Wednesday, when looking at silver prices we discussed the critical area surrounding 17. This is what we had to say from a tactical standpoint:
“Traders looking to short, now is the time for price action to turn bearish – whether it be a sharp turn lower or a key reversal bar on a failed breakout above resistance. This would be the first true indication of a break in the upward momentum since bottoming in late-December.”
On Wednesday, silver traded up above the 17.24 threshold we had penciled in before reversing and closing at the low of the session. It was a sign of rejection, a sign that momentum was turning back lower. But we need to see a break in the upward trend off the December lows before the down-side can gain traction.
Silver: Daily
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Pulling in closer to a 2-hour chart, silver is currently holding a lower parallel; and if silver is to make good on the rejection over 17 it will first need to break the near-term trend. Short-term traders looking to buy the dip on support, the lower parallel offers a line-in-the-sand. Resistance lies not far ahead, though, so a bounce back above 17 (especially 17.20/33) could stall-out quickly until overtaken on a daily closing basis. A drop below the lower parallel would be the cue for longs to turn cautious and shorts to look for a continuation of the rejection from resistance.
Support first arrives at yesterday’s low at 16.70, and beyond there we look to a couple of swing lows in the 16.56/50 vicinity and then 16.23. On the daily chart, there is potential for support to arrive at a parallel extending down off the December highs; this line is married to the lower parallel where silver found its low in December, crosses under lows in November and October. The level is in the 16.45/40 vicinity. Between short-term swing lows and the daily parallel, 16.40/56 will be a pivotal zone of support should we see weakness set in.
2-hour
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---Written by Paul Robinson, Market Analyst
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