Silver Price Forecast: Bullish Hammer Signals Strength, Targets Higher Resistance Levels

Despite weakness earlier in Monday’s session, silver is on track to close in a bullish position and possibly ending the day with bullish hammer candlestick pattern. It shows weakness to a three-day low earlier in the session before support was seen at the day’s low of 30.69. Since that low was relatively close to the 20-Day MA at 3.56, and given the subsequent bullish reaction following the low, a successful test of support around the 20-Day line was completed.

This could clear the way for a continuation of the bull trend that triggered a new bull breakout last week, above a downtrend line. Also, note that the 20-Day line crossed back above the 50-Day MA, which is also a sign of a strengthening trend.

Bull Hammer Shows Failed Selloff

If the day does end with a bullish hammer, a breakout above today’s high of 31.68 will be a sign of strength and it should be followed by an advance above last week’s high of 31.74. The high met resistance around the 50% retracement level at 31.81 and an uptrend line that previously indicated support for the rising trend. Therefore, a bullish breakout above last week’s high should quickly exceed the 50% level. And the trendline could continue to mark potential resistance since it is at an angle.

Next Higher Target is 32.53

Nonetheless, above the 50% retracement is the 61.8% Fibonacci retracement target at 32.53. That target can be watched along with a prior interim swing high at 32.33. Further up from there is the 78.6% retracement at 33.56, also a target. Notice that it coincides with the area around a top rising channel line. There were two failed attempts last year to break out above the line. The first was in May and the second was in October.

Long-term Weekly and Monthly Breakouts

Keep in mind that a breakout above 31.74 triggers a weekly breakout and therefore a bull trend continuation signal on a larger time frame than the daily chart. Moreover, it will also trigger a monthly breakout as the month of January has just completed. The trading range for January was inside the range from November, therefore, January completed an inside month.

There are two other indications on the weekly chart of interest. First, the recent swing low in late-December successfully tested support around the 50-Week MA. Further, silver reclaimed the 20-Week MA last week after it had been dynamic resistance for around six weeks.

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