Silver Gas Price Forecast: Drops Below Key MAs, Bearish Continuation Looms

Silver turned back down from 50-Day MA resistance on Monday and fell to a five-day low of 29.50. The 20-Day MA at 29.77 failed to provide support and silver is set to close back below the 200-Day MA at 29.95, at the time of this writing. Today’s price action is bearish and may easily lead to lower prices. Nonetheless, it will depend on what happens next. Not only will silver likely close the day below the three moving averages but it will likely end the day in a bearish position, in the lower third of the day’s price range.

Signs of Bearish Reversal

A bearish reversal is signaled today, setting the stage for a possible continuation of the larger bear trend as outlined by the declining trend channel on the chart. Last Friday’s high at 30.66 left a bearish clue as that high was at resistance of the 50-Day MA. Then today’s price action confirmed the bearish implications as the 50-Day MA was previously representing support and it is now marking potential resistance.

It is important to point out that the relationship to the 50-Day line (C) shows increasing bearishness. Notice that the last test of resistance at the 50-Day MA in December saw the price of silver bust above the line for a few days before reversing lower. It didn’t get above it this time. Selling pressure was too much.

Downtrend in Force

Essentially, since the 50-Day line closely parallels the top downtrend line, a test of resistance near that line may have completed today, before it could be specifically touched. If so, the price of silver has realigned with the larger downtrend pattern, indicating a possible end to the bullish counter-trend rally. A drop below today’s low of 29.50 could lead to a test support near the recent swing low (double bottom) at 28.90.

But given the potential bearish continuation of the falling trend channel, lower price levels may be hit before the correction is complete. Either way, there is the 78.6% retracement at 28.27, and the initial target from a falling ABCD pattern at 27.11. At a minimum, a decisive decline below 28.90 also highlights the lower channel line as a potential support target.

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