Silver Price Forecast: Eyes Breakout as Bulls Defend Key Support Levels

Silver continued to test trend resistance at the start of the week as it dropped to find support at 29.99 before buyers took back control. The dip tested support around the 20-Day MA, now at 29.88, the neckline of a double bottom pattern, plus support represented by a small rising trendline. A breakout of the double bottom bullish reversal pattern triggered two weeks ago on a rally above 29.895.

What becomes obvious is that today’s low was a bit above the support zone. But notice the signs of strength following today’s bottom. What this would seem to indicate is that if silver continues to trade above today’s low and then shows signs of strength, the bullish price action shown today will have provided an early sign.

20-Day Line Turned Up

Further supporting a bullish thesis is the 20-Day MA as it began to turn up last week and is close to converging with the internal uptrend line and the double bottom neckline. When indicators come together to identify a similar price area, it is a sign from the market to pay attention. These bullish signs are fighting resistance represented by the top downtrend line that is the top line of a declining parallel trend channel.

Last week’s high at 30.98 is the top of a counter-trend rally following a second low on the last trading day of 2023. If that high can be exceeded, then silver will be triggering a continuation of the bullish counter-trend rally and increasing the possibility that it could subsequently take out the 32.33 swing high from earlier in December.

Breakout Above 33.33

A decisive advance above the December swing high of 33.33 would trigger a bullish reversal based on the price structure of lower swing lows. Two other points are interesting to consider as they come from observation of the weekly chart (not shown). Turns out that the second low of the double bottom pattern in December was 28.78. That decline was essentially a successful test of support at the 50-Week MA, currently at 29.14.

Silver has retained support above the 50-Week MA since it was reclaimed during the week of March 4, 2024. Further, last week’s high found resistance at the 20-Week MA, now at 31.10. That means that a breakout above the 30.98 trend high might quickly encounter potential resistance around 31.10. Or a continuation through that price will provide further evidence that the bulls retain control.

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