Silver Price Forecast: Bullish Potential on Advance Above 34.02

Silver consolidated on Monday as it is on track to close as an inside day. A new trend high of 34.87 was reached last week before silver pulled back. So far, the pullback found support around the 38.2% Fibonacci retracement with a low of 33.09 from Friday. If silver can rally from there and break out above Friday’s high of 34.02 it will be in a strong bullish position to challenge and likely exceed the recent high. That would signal the completion of a minimum retracement of 38.2%, which reflects relatively strong demand.

Bullish Hammer Candle Sets Up

Notice that that Friday candlestick pattern takes the form of a bullish hammer, providing an additional piece of evidence for a possible continuation of the rally. But a trigger above Friday’s high is needed first. Strong demand is indicated if a bull trend continues following a relatively shallow 38.2% retracement, as it reflects strong underlying demand. Buyers don’t want to wait for lower prices and risk missing out on the next swing higher.

Next Higher Target Begins at 35.13

A decisive rally above 34.02 will put silver in position to test resistance around the recent high of 34.87. If it is exceeded there is a potential resistance zone close by from 35.13 to 35.38. That price range begins with the 200% extended target (D) for a rising ABCD pattern (purple). It includes a long-term 61.8% Fibonacci retracement level at 35.23.

That measurement is the extended retracement of the downswing that began from the April 2011 peak at 49.81. The target range ends with the completion of a small ascending ABCD pattern (not shown). Given the long-term nature of the 35.23 price level, it should be given special attention. If resistance is seen it could last for a little while, and a breakout signals likely higher prices in the near-term.

Support Indicated at 33.09

On the downside, a drop below Friday’s low of 33.09 signals a deeper pullback. Lower support looks to be around confluence of several indicators near a range of 32.49 to 32.31. Those prices consist of the 50% retracement and 20-Day MA, respectively. Subsequently, the 61.8% Fibonacci retracement is at 31.93 and support may be seen there. Also, keep an eye on the internal uptrend line for possible support.

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