Silver Price Forecast: Counter-Trend Rally Eyes 50-Day MA

Silver triggered a bullish reversal on Monday, as it rallied to a five-day high of 32.27 before stalling. The five-day high is at 31.15 and silver is currently trading around that price level. A daily close above that high would provide an additional piece of evidence supporting a continuation of the bounce into higher potential resistance levels. Nonetheless, silver is on track to close strong, in the top third of the day’s trading range. A strong close signifies improving demand that remains in control till the close, and therefore possibly longer.

Decisive Bull Hammer Reversal

A false breakout of a bullish hammer candlestick pattern potential bottom occurred last Friday as the day ended near the lows of the day after an earlier daily upside breakout triggered above Thursday’s high. Silver rebounded strongly and is set to complete a bullish daily pattern reflected in the long green body. This puts silver in sight of a test of possible resistance around the 50-Day MA, now at 31.67. It could get there quickly. A reclaim of the 50-Day line shows the 20-Day MA around 32.31 as the next higher target. Also, watch the May swing high at 32.52 if the 20-Day line is approached.

Targets 31.67 and 32.31

Today looks to be the beginning of a counter-trend rally following the breakdown of key price levels over the past couple of weeks. Therefore, the expectation is for an eventual turnback down once higher resistance levels are tested. However, support seen last week at 29.68 has a chance of holding. It was a test of support around the declining trendline at the top of a trend channel. And it was further indicated by finding support around the 61.8% Fibonacci retracement level at 29.67. But given the additional signs of weakness seen in the drop below both the 20-Day and 50-Day MAs, a recovery doesn’t look like it would proceed without some up and down movement.

Short-term Weakness Likely to See Buyers

For now, short-term weakness seems likely to see continued support and signs of demand. As the counter-trend rally progresses it should start to provide clues as to important price levels and patterns to watch for clearer signs of demand.

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