Silver Price Forecast: Reverses Higher for Bullish Outlook

Silver triggered a one-day bullish reversal on Monday as it broke out above last Friday’s high of $31.40 and kept going. Friday’s pattern was a bullish hammer candlestick with the lows bouncing off support around both the 50-Day MA at $30.97 and an internal uptrend line. The high for today was $31.84 and the low $31.12. This establishes a higher daily high and high low for silver for the first time in seven days. A daily closing price above $31.40 will confirm the breakout, while a closing price below that level shows downward pressure remaining.

Bull Hammer Reversal Triggered

Nonetheless, a bullish reversal was triggered from a key support level, and it sets the stage for further strengthening. Friday’s low at $30.81 has established higher swing low at an identified support level. And a rising trendline has been hit touched for the third time and at a similar price level as the 50-Day MA. These are bullish signs that should lead to higher prices. They fit within a larger developing bullish pattern.

Notice the declining trend channel with the top line begun from the October trend high at $34.87. Friday’s swing low was the first pullback following the bull breakout above that trendline in late-January. Moreover, the same is true for the 50-Day MA (orange). It was reclaimed in late January and Friday’s test of the line as support was the first since the bull breakout. Once prior resistance is successfully tested as support following a bull breakout, the trend is poised to continue higher.

Higher Resistance Likely Tested

Last week silver established a relatively wide price range from a low of $30.81 to a high at $32.76. Therefore, strength on a weekly time frame would occur on a rise above $32.76. Until then resistance seen on the approach to that high has less significance. Given the wide range last week, it is possible that this week’s trading range ends up as an inside week.

Near-term resistance is around the four-day high of $31.96, followed by the 20-Day MA at $31.12. It certainly looks like the market recognized the 20-Day line on the way down. Therefore, a sustained rise above the 20-Day MA will go a long way in confirming strength. A daily close above the 20-Day MA should greatly improve the chance for a challenge to resistance at the recent swing high of $33.39.

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