- Silver prices working on further clearance above July trend-line
- Inverse H&S formation could grow legs with the break
- Levels outlined
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When we were last discussing silver prices on Friday, we laid out a tentative plan for both would-be longs and shorts. The confluence of a bullish bottoming inverse head-and-shoulders pattern with the trend-line off the July highs put both sides of the tape on pause; confirmation needed. For shorts, we were patiently waiting for an invalidation of the H&S formation with a break below the right shoulder. We’re nowhere near doing that at the moment. For longs, we said a clean break of the July trend-line would clear a path for momentum to kick-in, furthering along the bottoming formation.
Yesterday, silver saw decent buying pressure and closed above the trend-line we have drawn in; this tilts the picture in favor of the bulls. We’re hanging out around the breakout level, with early trade today pushing silver marginally lower. As long as we don’t see a sharp drop back below the trend-line we’re going to run with the break from yesterday. We would prefer to see it push a little higher above the trend-line to get full clearance, but we’ll start working with what we have here, and should we get that push then our bias towards higher prices will increase with the price of silver.
Provided that silver starts rising and doesn’t drop swiftly back below the trend-line, we will have our eyes on the 200-day and top-side parallel; both not far ahead around the 17.87 mark. If the inverse H&S is to play out, this should only prove to be a minor bump in the road, if it is one at all. There could be some ‘trouble’ around 18.50 (August swing low, November closes below that low). What we’re really looking for on further strength is an eventual move towards the November high at 18.99. This level also aligns nicely with the symmetry of the H&S formation, which based on its depth points to a measured move to right around 19.
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---Written by Paul Robinson, Market Analyst
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