Silver Price Forecast: Bearish Signals Trigger

Silver failed to sustain its recent rally on Monday as it fell below key near-term trend indicators before finding support at the day’s low of 29.70. There was a confluence of price levels that failed to hold as support, including a small trendline touching the January 14 interim swing low, the 20-Day MA at 3.12, and the 200-Day MA at 30.07. Since all three lines failed there is the potential for further selling. However, at the time of this writing natural gas is trading near or slightly above the 20-Day MA. It may end the day above it, which could be short-term bullish.

Lower Swing High is Potentially Bearish

Nevertheless, recent highs up to last Friday’s high at 31.03, which is also a weekly high, shows a failure of the bull breakout that occurred recently above the downtrend line and 50-Day MA. The advance ended around the 61.8% Fibonacci retracement at 30.98. It began from a lower swing low in December that formed a double bottom pattern. Subsequently, a small parallel rising trend channel formed, which is a potential bear flag. Notice that it formed following a sharp decline from the December 12 swing high.

Bear Flag Pattern Triggers

Today’s drop shows provided the first bearish trigger for the flag pattern as trend support was broken. If there is further bearish confirmation another lower swing high will have formed. The dominant pattern is a bearish trend channel that started following the October high of $34.87 and it could exert its influence now that there have been clear signs of further weakness.

Further bearish confirmation will be indicated on another drop below the 20-Day MA, and then the interim higher swing low in the flat pattern at 29.50. A drop below that price level will provide a clearer bearish signal indicated a breakdown from the flag formation.

Lower Targets go to 27.11

Nevertheless, patterns don’t always follow through as they might support could be seen again around the December swing low at 28.75. A little lower is the 78.6% retracement level at 28.27. There are also two lower price targets from two declining ABCD patterns. One targets 27.47 (light blue) and the other 27.11 (purple).

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