Silver Price Forecast: Bearish Signals Persist

Silver showed signs of a possible bearish continuation on Monday as it dropped to a five-day low of 28.80 and triggered a breakdown from last week’s inside week. That low was close to the trend low of 28.75 from December 19 and it is at risk of being broken to the downside.

Today will likely end with a weak close in the lower third of the day’s trading range. The subsequent bounce from 28.75 found resistance around the 200-Day MA over the following five days. Silver was more clearly rejected to the downside from the 200-Day MA price zone last Friday as it fell to a four-day low, and today’s decline is a continuation of the seller dominated environment.

200-Day MA Shows Weakening

Once prior support is tested as resistance, in the case of the 200-Day line, the bear trend is showing signs it may continue. Silver had traded above the 200-Day MA since it was reclaimed in March of this year. It then stayed above the line until the drop below it on December 18. In addition to the inability of silver to subsequently rally above and stay above the 200-Day line, it was also unable to close above the line other than for one day since the breakdown.

This bearish price behavior lowers the chance of a quick reclaim of the 200-Day line before lower prices. Nevertheless, another bearish signal is needed to further confirm the bearish trend, with a drop below 28.75.

Rejection Top of Channel Could Lead to Test of Lower Trend Line

Given recent bearish signs around the 200-Day MA, the larger rising trend channel needs to be considered. The lower channel line begins on September 1, 2022, and the top line is copied to the top of the related rising parallel trend channel. Notice that there were two failed bullish breakout attempts through the top of the channel in 2024, one in May and the other in October. Although the second breakout generated a higher swing higher, it could not be sustained and was followed by the current correction.

Lower Targets Start with 28.28

The bearish scenario would begin to change on a rally above the seven-day high of 29.90. But until then the expectation is for lower potential support levels to be tested. Since there has been consistent bearish behavior following the October 22 swing high, there is a possibility that silver may eventually test support around the lower channel trendline. Nonetheless, the channel increases the chance that lower targets may be reached before the bearish correction is complete.

A 78.6% retracement level is at 28.28 and it is the next lower price level to watch for support. Then there is the 27.11 target from a falling ABCD pattern (purple), followed by prior price structure and the 61.8% retracement of a larger upswing, at 26.11. The lower level is around the lower rising channel line.

For a look at all of today’s economic events, check out our economic calendar.