Silver Price Forecast: Sitting on Key Support Zone

Silver had a low volatility day on Monday as it traded within a relatively narrow range of 30.47 to 30.75. And the range was within Friday’s price range. Nonetheless, on a short-term basis silver is showing weakness as it is closing back below the 20-Day MA for the second day in a row, after trading above it for the prior eight days. Also, last Friday’s low of 30.29 provided another bullish reversal from a touch of the rising trendline. In other words, silver is sitting at a key support zone defined by the rising line.

Bearish Below 30.29

A breakdown occurs on a drop below last week’s low of 30.29. That would trigger a drop below the trend line and a decline below last week’s low. It should be highlighted that last week’s candlestick pattern was a bearish shooting star. Maybe it was not in the ideal location of the trend as it is within a weekly consolidation zone, but nonetheless it was bearish. And since the rising trendline correlates with last week’s low, it should be given attention.

Prior support around 29.68 to 29.64 may be tested if last week’s low fails to hold as support. Although the potential for a triple bottom exists, it is also possible that silver continues lower, below the double bottom, to support around the downtrend line or the 78.6% retracement zone at 29.24. Regarding the double bottom, if last week’s low is busted then the double bottom pattern can be considered a failure. That would be another bearish piece of evidence if it were to occur.

Bulls Likely to Appear Above 30.29

On the bullish side of the analysis, a sustained rally above Friday’s high of 30.29 would trigger a one-day bullish reversal and a reclaim of the 20-Day MA. Subsequently, a daily close above that high would confirm strength and put silver in a position to likely challenge the double bottom neckline at 31.54 and recent interim swing highs of 32.33.

During the recent bearish correction starting from the October swing highs, silver retained its uptrend price structure as support was seen at the rising internal trendline. This reflects a valid rising trend that remains in place. The trend can be assumed to continue until there is evidence to the contrary. Contrary evidence would first be indicated by a decisive decline below last week’s low.

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