Silver’s Rally: Consolidation and Potential Breakout Signals

Silver Forecast Video for 29.08.23 by Bruce Powers

Early last week silver broke out above the internal downtrend line and 200-Day exponential moving average (EMA). It closed above the 200-Day line on multiple days since as the advance further progressed higher. That is a sign of strengthening as underlying demand in silver builds. Subsequently, the rally stalled beginning last Thursday as silver starts to consolidate near the highs of the bounce.

Consolidating Near Trend Highs

A small bullish pennant continuation pattern looks like it might be starting to form in silver. If so, the pattern is still relatively early in its development as a rally occurred only last Friday at 24.37. Today, silver trades inside day, reflecting uncertainty, which follows an outside day last Friday. The retracement off last week’s peak of 24.37 has been mild so far, with silver not yet pulling back to the minimum 23.6% Fibonacci retracement, which reflects underlying strength.

Decisive Rally Above 24.37 is Bullish

Although the consolidation pattern is not yet clear a decisive upside breakout above last week’s high of 24.37 is bullish. The question will be whether buying pressure is strong enough to keep silver rising following a breakout, or will it fail as seen on Friday, leading to further consolidation or a deeper pullback. The next upside barrier for silver is at the intersection of the downtrend line and 78.6% retracement at 24.58. However, if the current rally has legs silver should bust through that level. Notice that the price level marked by the downtrend line will decrease going forward given the descending line.

Last Rally Points to a 25.37 Upside Target

Might we see symmetry when comparing the current rally with the most recent that began off the June 23 low of 22.10? That prior advance saw silver climb by 14.3% to a swing high of 25.25 in 19 days. The current advance is up as much as 9.7% as of last week’s high. It will match the previous rally around 25.37. If reached, the advance will trigger a bullish intermediate trend continuation signal on a daily close above the swing high at 25.25 from July 20. Today is the nineth day of the current advance.

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