Silver Faces Intense Bearish Pressure, Testing Key Support Levels
Silver Forecast Video for 03.10.23 by Bruce Powers
Silver sold off hard last week, closing at a 27-week closing low and at the low for the week. That bearish sentiment has carried over to this week as seen in today’s wide range red candle. Lows are being further tested at the time of this writing. So far, silver has reached a low for the day of 21.16.
Flirting With Possible Area of Support
Today’s low is flirting with a possible support zone from around the lower parallel channel line, the long-term uptrend line, and the 78.6% Fibonacci retracement at 21.12. Certainly, there are no indications yet that the price of silver has reached an area of support. Downward pressure continues to dominate trading activity. A declining ABCD pattern with the CD leg extended by 127.2% of the AD leg completed today at 21.24 but silver kept falling. The lower edge of the current support zone is around the 141.4% Fibonacci extension of the falling ABCD pattern at 21.05.
Silver is Very Oversold
Silver is in an extreme oversold area as indicated by the relative strength index (RSI) momentum oscillator. The current reading is 24.71. That’s the most oversold level for silver since February. This doesn’t mean that silver will not keep falling as an oversold condition can last some time. However, if a bullish reversal comes within the support zone noted above, the condition of the RSI will be supportive of such a move.
Initial Rally Could Reach Prior Lows Starting around 22.09
If a bounce comes off the current support zone, then the prior support price range from around 22.09 to 22.28 is a potential resistance zone of note. Today’s price action reflects a flush out of weak holders in silver. If it continues with a drop below 21.05, the 88.6% price zone will be next in line at 20.49. And the prior March swing low at 19.76 will be at risk of being reached. We will be following price action carefully during the remainder of this week for any clues that may provide some clarity as to what comes next. Just keep in mind that sharp moves in one direction are frequently followed by sharp moves in the opposite direction.
For a look at all of today’s economic events, check out our economic calendar.