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Silver Price Forecast: Bearish Weekly Reversal Triggers Sharp Decline

By:
Bruce Powers
Published: Apr 22, 2024, 20:29 GMT+00:00

Silver's weekly chart sees a bearish reversal, targeting initial support near 27.06 to 26.79, with further downside potential towards 26.21 to 25.87.

In this article:

Silver triggered a bearish reversal on its weekly chart on Monday with a decisive drop below 27.59. Selling picked up during the drop with silver continuing to trade near the lows of the day at the time of this writing. The first key target around the 20-Day MA at 27.06 has almost been reached. It ties to the March 2022 swing high at 26.95. Moreover, the 38.2% Fibonacci retracement is at 26.79 and a falling ABCD pattern (marked on chart) completes at the same price. Together, these initial downside targets can be watched as a potential support zone from 27.06 to 26.79.

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Only First Day of Retracement

Given the recent 33.8% rally in silver, from the February 28 swing low to the 29.80 peak, and today’s weekly reversal followed by a sharp decline, it wouldn’t be surprising to see further downside or consolidation in the precious metals before a correction is complete.

If the 26.79 price level is broken to the downside the next likely target is a price zone from around 26.21 to 26.14. Further down is the third lower target zone identified from 25.91 to 25.87. In each case, the price zone includes a previous swing high where resistance was seen in the past and we may now see support. Also, there is a Fibonacci target level around each of the swing highs.

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Large Bull Flag is Dominant Pattern

During the recent advance the outlook for silver took a big bullish step forward. The 26.14 swing high from May was exceeded to the upside thereby triggering a continuation of the rising trend that started from the September 2022 swing low. Further, a rally through March 2022 swing high of 26.95 further confirmed a bullish reversal of the declining trend channel that began from the February 2021 trend high. That is two significant long-term price levels that were busted. The behavior suggests that demand for silver is improving and therefore the long-term bullish outlook.

When considering the March 2020 swing low of 11.64 to be the beginning of the current uptrend, the potential for an aggressive rally in silver, following the current retracement, becomes apparent. Notice that prior to the pullback from February 2021, silver had risen by 18.22 points or 156.5% in only 20 weeks. The long-term pattern takes the form of a bullish flag, and an upside breakout is still in its infancy.

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About the Author

Bruce boasts over 20 years in financial markets, holding senior roles such as Head of Trading Strategy at Relentless 13 Capital and Corporate Advisor at Chronos Futures. A CMT® charter holder and MBA in Finance, he's a renowned analyst and media figure, appearing on 150+ TV business shows.

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