- Silver continues to head higher from inverse H&S formation
- Riding higher within parallels
- 18.50-ish next area in focus with further strength
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The other day when we looked at silver it was trading right around the 200-day MA; a form of resistance we viewed as minor when considering the broader forces at work following the breakout from the two-month-long inverse head-and-shoulders pattern.
The US dollar is helping (now), but not sure how much it matters at the moment. Just a couple of days ago the two-week correlation between the dollar and silver stood at a positive 78%. Fancy that. The two can move together. This is why watching correlations out of the corner of your eye is a good thing, and not getting overly caught up in them; especially in the short-term.
Silver is riding higher along an upper parallel just above the 200-day. The upward sloping level of resistance shouldn’t be much of a factor if we are to see the eventual target at 19; this is not only the November peak, but also the measured move target based on the depth of the H&S formation. The concern is the area around 18.50, as we’ve discussed before, where lies the biggest threat to stopping the advance prior to reaching the target. The low from August and several daily closes in November have made 18.50-ish important.
Short-term, there is a parallel to the top-side line which is helping keep silver moving ‘neatly’ higher. A break below there and an undercut of the most recent swing low on 2/15 at 17.73 would bring the short-term picture into question. But overall, it would require an aggressive reversal lower to hit pause on the broader advance.
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---Written by Paul Robinson, Market Analyst
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