Silver’s Correction Nearing Completion? Bullish Hammer Candle Points to Potential Upside

Silver Forecast Video for 16.05.23 by Bruce Powers

The retracement in silver continued on Monday with the precious metal triggering a bear trend continuation as it fell below Friday’s low of 23.72. Subsequently, support was found off the day’s low of 23.49, leading to an intraday bounce. That low was at the 100-Day EMA (purple), which is at 23.46. During the decline the 38.2% Fibonacci retracement was completed at 23.69.

Silver Forms Bullish Hammer Candle

Depending on how it closes, silver is on track to finish the day with a bullish hammer candlestick reversal pattern. Therefore, if it plays out as it might, a bull trend continuation signal occurs in the next day or two on a move above today’s closing high. The current high at the time of this writing is 24.20.

During Monday’s drop silver briefly broke through support of its downtrend line, that lies at the top of a declining trend channel. That channel has been developing for over two years and is therefore significant. A bullish breakout occurred on April 4. The past two days have seen a test of support of that line that was previously resistance. Friday’s decline stopped around support of the line, while Monday price broke below it briefly but was quickly met with more aggressive buyers. A bullish hammer candle tells us those buyers may remain in charge as silver progresses.

Short-term Signs of Strength

Given the significance of the downtrend line, the quick bullish rejection of price off the 100-Day EMA, as well as the bullish candle for Monday, the correction in silver may be complete. Nevertheless, silver did breakdown from a double top bearish reversal pattern last Thursday as it closed below the neckline of the pattern at 24.47. The low end of the topping range near that 24.47 low is where resistance could be seen again.

Key Up and Down Price Levels

The lower target from the double top pattern is down at 22.82. That’s just shy of the 200-Day EMA, now at 22.74, while the 50% retracement is at 22.94. The upside target remains the completion of a rising ABCD pattern at 26.84.

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