Silver Futures Index $SILVER (SILVER)

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Analyzing Silver’s Short-Term Prospects Amidst Recent Price Swings
By: Bruce Powers | September 25, 2023

• Key support at 22.80 is crucial for maintaining the bullish outlook, while a decisive rally above 23.76 would confirm the ongoing uptrend.

Last week silver triggered a bullish weekly reversal on a breakout above the prior week’s high of 23.28. The pattern from the previous week’s high was a bullish hammer candlestick. Subsequently, the bullish breakout was confirmed by daily closes above the week’s high as well as a strong weekly close, in the top half of the week’s high to low range. Starting this week, silver has pulled back triggering a daily bearish reversal from an inverted hammer candlestick pattern formed last Friday.



Weekly Breakout Followed by Consolidation

Given the weekly breakout of a strong bullish candle last week and the subsequent confirmation of strength, silver can be expected to eventually follow-through to the upside. On the weekly chart there is the beginning of a series of higher weekly highs and higher weekly lows. In the interim, it wouldn’t be surprising to see some consolidation and profit taking kick in first. We are starting to see that today.

Weekly High and Low Provide Key Price Levels

Nevertheless, last week’s high and low-price levels identify the key nearby resistance and support levels to watch. Last week’s low and support was 22.80. A drop below there is not anticipated if the general short-term bullish outlook is to be maintained. However, it if does happen, then the possibility of a test of the recent low of 22.28 increases.



Bull Move Above 23.76

On the upside, a decisive rally above last week’s high of 23.76 triggers a continuation of the evolving uptrend (from September 14 swing low). Following today’s close, an upside breakout above today’s high of 23.63 will also provide a bullish signal. The difference from waiting for a weekly breakout is that a daily breakout is more likely to fail and lead to a continuation of the current developing inside week, which represents consolidation on that time frame.

Traders Cautious as Volatility Declining

Volatility in silver has been declining the past couple of months as price compresses with shorter swings developing overall. Lower volatility and consolidation lead to more false signals and a lack of follow-through. The shrinking of volatility can be seen by looking at how the uptrend and downtrend lines are moving closer together. They will cross around December 11. Until silver gets out of consolidation as represented by those two lines, it is likely to continue to face a higher degree of uncertainty and lack of directional follow-through.

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