Silver Technical Outlook: Resistance Threatens Rally
- Silver rally since last month has brought it near a key are of resistance
- Momentum is weakening, but one more push higher may be all it can sustain for now
- Support levels below to watch should silver weaken soon
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The rally in silver (gold, too) has been impressive, and one we admittedly didn’t think would commence until a little more weakness was seen first. But, nevertheless, here we are trading well over 17 after traversing the mid-15s just a month ago.
There is significant resistance from around current levels up to 17.46. The upper portion of the triangle formation which proceeded the November/December decline has several inflection points. Add in the July 2016 trend-line and you have a significant area of resistance.
Price action matters when determining if the support or resistance levels penciled in will matter to the market or not. Momentum is still broadly in favor of longs despite the past couple of days showing a bit of a struggle. A strong reversal lower will be our cue that the market is ‘honoring’ resistance. (For more on reversal price action, check out this video on candlestick analysis.)
On weakness, the first level of support arrives by way of the 200-day at 16.91, but what gives it even more weight is the trend-line off the December low. It’s viewed as the first test, with another level (and line) of support clocking in near 16.60. This will constitute a retest of the September trend-line and October swing-low. Given the confluence it is viewed as a more reliable area to look for a decline to end.
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---Written by Paul Robinson, Market Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.