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Silver Price Forecast: Bullish Reaction Signals Potential Trend Strength

By:
Bruce Powers
Published: Jun 3, 2024, 20:44 GMT+00:00

Silver's bullish reaction today avoided a deeper pullback, finding support at 29.79 and potentially signaling the end of the retracement.

In this article:

Silver dropped below the purple 20-Day MA briefly today before finding support at 29.79 and bouncing back above the opening price. That is a bullish reaction to what could have been the beginning of a deeper pullback. Instead, buyers quickly stepped up and took back control. The pullback completed a second test of support at the 38.2% Fibonacci retracement level (30.04).

Moreover, notice that support was seen around prior resistance from the previous trend high of 29.80 from April 12. That is bullish behavior as the market recognized that price area given the subsequent reaction. It was the most recent previous trend breakout level. Further, today’s low shows price symmetry within a small declining ABCD pattern.

A graph of stock market Description automatically generated with medium confidence

Closing Strong for the Day

Silver is on track to close strong for the day. It is positive for the day and in the top third of the day’s trading range. Since today’s bullish behavior follows an initial bearish breakdown, it might signal the end of the retracement. And sharp moves frequently follow false moves. It may also eventually negate the potential double top that has formed in silver. An upside breakout will next be triggered on a rise above today’s high of 30.81. It will be particularly interesting if the close today completes a bullish hammer candlestick pattern as it is currently looking like it may do so.

Improving Demand as Buyers Step Up

If today’s low ends up being a swing low that leads to higher prices, silver will be indicating improving underlying demand. Notice that the prior pullback successfully tested the 50-Day MA as support after dropping below the 20-Day line. If today’s test of support at the 20-Day is held, it shows support at a higher price level relative to the retracement. This is the type of price action seen when the strength of a trend is improving as it increases the rising slope of the uptrend.

Key Support at Today’s Low of 29.78

Today’s bullish price action gives greater significance to the day’s low. If the low is broken to the downside, following today’s bullish turn, the 50-Day MA at 28.25 becomes more likely to be reached as a deeper retracement kicks in.

For a look at all of today’s economic events, check out our economic calendar.

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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