What’s inside:
- Silver price action has not confirmed the end of the correction
- There are levels which could see silver stall, watch price action around them
- 2003 trend-line viewed as major target
What important factors are expected to impact Precious Metals in Q3? Find out here!
Precious metals continue to bounce with the help of a very weak US dollar, but looking at silver price action the feeling on this end is that it’s still corrective in nature and that we have yet to see the worst levels before a meaningful low can form. Lower lows (LL) and lower highs (LH) are still very clear.
We were looking at a confluence of horizontal and trend-line resistance as a potential capper on the bounce, but the market wasn’t showing a bearish response. Price action at levels is key – does the market respond to it or not? That is, does momentum turn once a certain level is met. So far, we have not seen that happen, and so while the current rally appears to be a counter-trend move which will dissipate and turn lower, we need to wait for price action to tell us when that time may have arrived. (Price action at price levels is a facet to my analysis discussed routinely in webinars.)
What’s a potential road-blocker now? The lowest closing prints from last month are currently being tested around the 16.40 mark. A turn lower from here or even a drive higher through resistance and failure to hold above on a daily closing basis (forming a key reversal bar) would constitute the price action we are looking for. If, however, silver continues to travel higher we may have to wait for the bounce to fizzle out at the trend-line running down off the April high, which could come into confluence with a swing high created towards the very end of last month.
In either event, should we see silver turn lower we are still targeting the 2003 trend-line near the 14.85 mark. It’s at that point we might be in for a very sizable rally. For now, though, we’ll continue to focus on finding a spot to join the broader trend lower.
Silver futures: Daily
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---Written by Paul Robinson, Market Analyst
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