Silver Price Forecast: Uptrend Sustained with Bounce off Support

Silver peaked at a high of 28.77 last Friday before ending the day in the red with a bearish candlestick pattern. Sellers again dominated today, Monday, as the price of silver fell below Friday’s low of 28.04. However, support was seen at the day’s low of 27.97, leading to a minor intraday bounce.

Support was seen around the crossing of two rising trendlines, one is short-term representing dynamic support for the advance from the most recent swing low at 26.02. The other covers a longer time frame beginning from the February 28 swing low. The longer line is of greater significance and the shorter line confirms the support level.

Resistance Becomes Support

Dynamic resistance represented by the 20-Day MA and longer uptrend line were exceeded to the upside recently. Once resistance is exceeded price frequently will pullback and test a similar price area as support. If it holds and price is rejected to the upside, the uptrend has provided a new clue that improves the chance for the trend to continue. Today’s bounce off the trendline provides such a clue. However, follow through to the upside is needed, while a drop below today’s low would be short-term bearish.

Rise Above Trendline Showed Strength

Note that silver dropped below the longer uptrend line on April 30 and stayed below it until last Thursday. Today it is on track to end with a narrow range day and successful test of support at the trendline. Therefore, if the uptrend line continues to mark support, silver will be triggering an upside breakout on a move above today’s high of 28.39. If today’s low is broken then the 20-Day MA at 27.48 becomes a target for support, followed by a recent minor swing low at 27.01.

Last week’s high completed a small rising ABCD pattern and it may mark a short-term top. In that case, further consolidation or a deeper pullback becomes more likely. Friday’s weak close puts into question the potential for the current rally to continue with a similar rising slope.

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