Silver Futures Index $SILVER (SILVER)

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Silver’s Retreat: Analyzing Fibonacci Patterns and Potential Support Levels
By: Bruce Powers | September 4, 2023

• A bearish inverted hammer candlestick pattern on the weekly chart, coupled with a drop below last week’s low, suggests increasing selling pressure.

Silver peaked at a trend high of 25.00 last week. That high completed an 88.6% Fibonacci retracement before it began a correction. During the advance silver was able to close above the internal downtrend line for a couple days before it fell back below the line last Thursday. A pullback to the 38.2% Fibonacci level at 23.93 may complete today as the low of the day so far is 23.95 and silver continues to trade near the low of the day’s range at the time of this writing. However, given the bearish pattern on the weekly chart it looks likely that silver will deepen its pullback.



Weekly Bearish Pattern Triggers, Increasing Selling Pressure

On the weekly chart (not shown) there is a bearish inverted hammer candlestick pattern that was completed last week. A bearish signal was triggered today on a drop below last week’s low of 24.03 and the price action confirms that selling pressure is increasing. When looking at Fibonacci ratio analysis the next likely target is around 23.67 to 23.0, consisting of a prior weekly high and the 50% retracement, respectively. That price zone is followed by a range from around 23.27 to 23.17. It consists of the 61.8% retracement level at 23.27, the 200-Day EMA is at 23.23, and a weekly low at 23.17.

Key Lines Should Provide Support on the Way Down

Following a retracement low of 22.21 three weeks ago, silver was subsequently able to burst back above both the long-term uptrend line and 200-Day EMA and continue to rise. As it pulls back from last week’s high those two lines are key areas to watch for support. Moreover, the 22.81 price zone, which is where two trendlines cross and is marked by a purple right extended line on the chart would be the maximum low that we would like to see.

Bullish Pattern on the Monthly Chart

Longer-term price dynamics as represented on the monthly chart indicate that silver could accelerate higher at some point. For the previous several months it has tested and held above the 34-Month EMA. Last month’s candle pattern is a bullish hammer. Although in this case it would be a continuation pattern rather than a reversal, which is more common. A decisive rally above last week’s high of 2.02 triggers a monthly bullish signal for silver.

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