Silver Price Forecast – Intraday Downtrend Continues within Larger Consolidation

Silver continues to consolidate within a descending parallel trend channel as it corrects off the $19.63 peak reached early-September. Given the price behavior since then it looks like the consolidation/retracement phase will take more time.

Bigger Picture View

Nevertheless, overall on the daily chart the pattern takes the form of a bullish flag trend continuation formation and it follows another bullish pattern breakout of a falling wedge in December.

At this point, a decisive rise above the top trend line will be the first sign that silver may be getting ready to breakout of the flag, while an advance above the 18.08 swing high will be needed for confirmation of strength, followed by a daily close above that high. Thereafter, a daily close above the $18.33 peak provides higher confidence.

Price Behavior – Intraday 2-Hour Chart

In the near-term, silver broke down from a bear flag pattern Tuesday, subsequently pulled back to test resistance of both the rising lower trend line marking the pattern along with the 34-period exponential moving average (ema), and then proceeded lower. Support was eventually seen at $17.47, just shy of the 88.6% Fibonacci retracement, before silver bounced.

Continues in a Downtrend

This all indicates that on an intraday basis silver remains in a downtrend and can be anticipated to continue lower unless proven otherwise.  Recent price behavior tells us a couple things. One, we can use the 34-period ema going forward to mark possible resistance, and a clear break above the line is a sign of short-term strength.

Second, a move above the $17.71 swing high is short-term bullish as it violates the downtrend structure of lower swing highs and could lead to a bullish reversal. Of course, this may be a useful signal or not depending on one’s approach to market engagement.

Area of Price Support

If silver continues to fall below the 2-hour low of $17.47, then watch for possible support and subsequent reversal around the 127% Fibonacci extension at 17.17 and the long-term uptrend line, followed by the $17.07 to $17.01 price range.