Silver Price Forecast: Signals Potential Bounce Amid Bearish Correction

Although there is a good chance that silver has not yet completed its bearish correction, a bounce may occur before it continues lower, if it is to eventually do so. On Monday, silver advanced slightly to a three-day high of 29.88, at the time of this writing. That was a reclaim of the 200-Day MA (blue), now at 29.67, and a minor bullish indication. Also, notice that the 200-Day line converges with the 61.8% Fibonacci retracement and previous lows from November.

In other words, there are several indicators identifying the support level that was recently busted and now references potential resistance. If resistance is cleared to the upside, then a bounce could proceed up to test higher resistance around internal uptrend line and the 20-Day MA (purple). Notice that the 20-Day line is converging with the rising trendline and today they both identify the same price area. Currently, the 20-Day line is at 30.62.

Daily Close Above 200-Day MA, Short-term Bullish

A daily close above the 200-Day line would indicate strength that could persist into a counter-trend rally. Resistance around the 200-Day line was seen on each of the past two days so today’s advance is a very small change in character, but it is a change. A clearer bullish indication could lead to higher prices and the first sign of that would be on a rally above today’s high of 29.88.

If a rally does come and silver is able to get above and stay above the 20-Day MA, then the next higher target would be a test of resistance around the 50-Day MA (orange). Currently, the 50-Day line is at 31.51 and it resides around the top downtrend line, which represents potential resistance as well.

200-Day Line Needs Attention

The 200-Day MA has represented trend support since early-March of this year. Last week there was a daily close below the line on three days, while there was none previously since the 200-Day line was reclaimed in early-March. Therefore, if a rally is followed by a continuation back down and below the 200-Day line, silver is likely heading to a deeper bearish correction and a longer time below the 200-Day MA.

Nevertheless, the two next lower targets are at the 78.6% retracement at 28.27, and the completion of an initial target for a falling ABCD pattern at 27.11 (purple). Notice that the beginning of the ABCD pattern is at the trend high that completed a five wave Elliott Wave advance at 34.87.

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