Silver Technical Analysis: Confluence of Support May Soon Break
Silver technical highlights:
- Silver has solid support at its feet
- Confluence between price and trend-line
- Gold range-break suggests silver may soon cave with it
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Lately, silver has held up better than its big brother, gold, but if the yellow metal continues to trade lower then the confluence of support at silver’s feet may soon break. There are several inflection points in the low-16s running back to February which have helped keep price supported, while recently the trend-line from July has come in as assistance in keeping silver buoyed.
For starters, support is to be respected as such until it breaks. With that said, shorting in anticipation of it breaking isn’t the most prudent approach. It looks likely to break, though, especially with gold having a good distance to go before making good on an extended move from its recent range-break.
On a confirmed break below 16.06, that is – a closing daily bar beneath the threshold, there isn’t any significant support until the December low and 2003 trend-line. The long-term trend-line coupled with the swing-low will likely make for a substantial floor around 15.60.
At the immediate moment we’ll need to be patient for shorts, but perhaps this week we’ll see the break we’re looking for. On the flip-side, for those who are long or looking to establish a long, support can be used as a backstop for assessing risk.
Traders are 4-1 long gold, check out the IG Client Sentiment page to see how this acts as a contrarian indicator for both gold and silver.
Silver Daily Chart (Confluence of support at risk)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.