Analyzing Silver’s Chart Patterns: A Bullish Outlook

Silver Forecast Video for 07.11.23 by Bruce Powers

Silver remains stuck inside a tightening consolidation range as it flirts with support from multiple trendlines and moving averages. Included around the two-week range are two trend lines plus the 50-Day EMA (orange) and 200-Day EMA (blue). The two-week range has been occurring around support of the 38.2% and the long-term downtrend line (thicker blue). A retracement that stops falling and turns back up around the 38.2% retracement is showing strength relative to deeper retracements.

Small Symmetrical Triangle Forms

The two-week consolidation phase takes the form of a small symmetrical triangle or pennant (purple boundary lines). Its formation follows a sharp 14.6% rally in 13 days that peaked on October 20 at a high of 23.68. The question is whether the 14.6% rally qualifies as a pole prior to the pennant/triangle consolidation phase? Generally, it doesn’t look like that sharp of a pole as we might see in other pennant setups. Nonetheless, the underlying message is similar. A breakout of the pennant/triangle is bullish and likely provides an initial signal for a continuation of the developing uptrend.

ABCD Pattern Targets 25.44

An ABCD pattern has been added to the chart showing the potential target from the pennant along with the pole (sharp rally before consolidation). With the ABCD pattern we are looking to identify when the CD leg up matches the price appreciation seen in the initial AB leg of the trend. It is interesting that if hit, the target of 25.44 would put silver above each of the next two identified target zones (red highlights).

Consolidation May Continue Through This Week

It could take a little more time before volatility picks up though and a breakout triggers. The pennant consolidation phase could continue to evolve for another couple of weeks before it is ready to break out. Although there are two points to create each boundary line the filling of the pattern is currently less than halfway towards the apex of the triangle. Nevertheless, it doesn’t have to fill more of the triangle before a breakout.

As it stands now a bullish breakout is triggered on a decisive rally above the 23.59 high from October 30. Further confirmation will then be provided on a rally above and daily close above the trend high at 23.68.

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