Silver Futures Index $SILVER (SILVER)

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Silver Consolidates Near Highs, Poised for Potential Breakout
By: Bruce Powers | July 15, 2024

• Silver has been consolidating near recent highs, with a breakout above 31.76 signaling bullish continuation. Key support around 30.14-29.80 underpins the near-term bullish outlook.

Silver has been consolidating for the past six days, since reaching a high of 31.49 on Friday July 5. A subsequent higher rally high of 31.76 was reached last Thursday. An advance above that high will trigger a bullish continuation of the rising trend. Key near-term support is close by around 30.14 to 29.99. It starts with a swing high from February 2021, followed by the 20-Day MA at 30.07 and the 50-Day MA at 30.00.

Another swing high, this time from April 12, shows at 29.80. Together, these price levels can be considered as a range from around 30.14 to 29.80. A near-term bullish outlook is maintained if silver stays above that price zone during weakness.



Bullish Reversal on Channel Breakout

On July 3, silver triggered an upside breakout from a bearish retracement channel. The breakout was decisive, completing a wide ranged green candle with a close near the highs. In addition to the channel breakout through a downtrend line, a bull breakout of both the 20-Day MA and 50-Day MA was also triggered. Notice that during the recent decline the 20-Day line approached the 50-Day line, but it did not drop below it. As prices reverted towards the mean, the two moving averages converged towards each other.

Low Volatility Has Higher Volatility on Deck

Lower volatility typically leads to higher volatility, and that looks to be what silver is preparing for. Declines towards support are likely to be used by investors to build a position at somewhat lower prices than seen recently. That support area should be strong enough to lead to a bullish rally that sees silver exceeded the recent 31.76 swing high. A pullback before an upside breakout refreshes the situation and better prepares silver for a sustained rally towards previous highs from 32.30 to 32.52.

50-Day MA Trend Support is Key

Since trend support was reestablished recently around the 50-Day MA, it should continue to represent a key trend support area as prices further appreciate. The recent attempt to fall below the 50-Day MA was eventually met with support and a recapture of the line. Given the subsequent bullish recovery, another test of support may occur, but the 50-Day line should stay strong and stop an additional decline in prices. Let’s also keep in mind that a bullish signal triggered on the July monthly chart this month. It sets up the potential for bullish follow through on that time frame. Therefore, the shorter time frame patterns should keep in mind the larger developing monthly bullish pattern.

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