Silver Futures Index $SILVER (SILVER)

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Market Melody: Decoding Silver’s Trends, Breakdowns, and Support Levels
By: Bruce Powers | January 22, 2024

• Silver sees deteriorating demand, putting lower trendlines at risk of being tested as support.

The technical picture in silver deteriorated on Monday as it fell to a new retracement low with a wide range red candle. Trading continues near the lows of the day but at the time of this writing the low is at 21.93. Minor support was seen there leading to a small bounce. Support was seen at the 78.6% Fibonacci level of a falling ABCD pattern, leaving the impression that it is recognized by the market. If a continuation of the ABCD pattern is triggered on a drop below today’s low of 21.93, silver will next target a full completion of the pattern at 21.21.



Completes 78.6% Extension Target

As discussed previously, the ABCD pattern can be extended by Fibonacci ratios. A standard target has the CD leg match the price change in the AB leg. Also, the 61.8% and 78.6% Fibonacci levels with the CD show a harmonic relationship. This means that based on the ABCD pattern along today’s low has the potential to be a bottom. However, other signs within the charts show silver at risk of testing lower support levels.

Lower Price Levels at Risk of Being Hit

Today, silver triggered a breakdown from a trendline thereby putting the lower trendlines at risk of being reached. You can see that the 78.6% Fibonacci retracement at 21.80 is very close to the long-term uptrend line, while the internal trendline is close to a match with the 100% completion of the ABCD pattern at 21.21. Each of these price levels may see signs of support if silver falls below that low. There is a large symmetrical triangle in silver that saw a false breakout in late-November. If silver fulfills a complete swing back it would be testing support around the bottom of the triangle near 21.21.

Signs of Deterioration

Signs of deterioration in the strength of demand can be seen with the 20-Day MA as it has recently fallen below both the 50 and 200-Day moving averages. You can see how the 20-Day line is recognizing the internal declining trendline as well. Given today’s definitive bearish day, downside targets are most likely to be tested. Additional bounces from today’s lows heads up into resistance around the above internal uptrend line. Today’s high at 22.66 can be used as a proxy for that line.

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