Silver Futures Index $SILVER (SILVER)

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Silver Forecast: Potential for Sharp Rally from Weekly Bullish Pattern
By: Bruce Powers | September 18, 2023

• Silver’s recent resistance tests near the 200-Day EMA suggest an impending breakout, potentially marking a turning point in its price trajectory.

For six out of the past eight days silver has been testing resistance of the 200-Day EMA, currently at 23.21. It did so again today as it hit a high of 23.23. Nonetheless, silver is on track to close at its highest daily closing price in nine days. This could be the precursor to a breakout above the 200-Day EMA. Yesterday’s daily high of 23.28 can also be used as a price level given that it identifies the high resistance level of the eight-day range. A daily close above 23.28 will confirm a breakout of the eight-day bottoming formation.



Highest Close in Nine Days Will Show Strength

In addition to the likelihood of today’s close being at a nine-day closing high, it will also be the first daily close that is clearly above the long-term downtrend line in the past eight days. For the past 17 weeks or so silver has been swinging up and down within a consolidation range. As it starts to trade back above the long-term trend line the chance for an upside breakout of consolidation intensifies. A narrowing of the range has begun in recent weeks as the last swing high and lower were closer to each other than the prior two. Price contraction usually leads to price expansion.

Potential for Aggressive Buying as Seen in 2020

The larger picture in silver is bullish and relates to previous price action from 2020. In August 2020 silver peaked at a high of 28.89, which ended a 165.8% rally off the March 2020 low of 11.22. Subsequently, it made a new trend high of 30.08 in February 2021 and has been in correction mode since, forming a declining parallel trend channel. This price behavior is like a flag but on a larger scale. Nevertheless, once a decisive sustainable breakout occurs out of the trend channel, an accelerated upward move may occur as aggressive demand returns.



Weekly Bullish Hammer Breakout on Move Above 23.28

Last week silver completed a bullish hammer candlestick pattern at the bottom of the retracement. A bullish breakout is signaled on a move above 23.28 and a daily close above it will confirm strength. Once confirmed, short-term weakness has a greater chance of recovering to the upside.

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