Silver Price Forecast – Silver Shows Short-term Strength but Remains Stuck in Consolidation

Key price areas to watch next for silver are the most recent swing high of $18.08 on the upside and $17.47 on the downside, followed by $17.07.

The upside price is the more significant as a move above it will trigger a breakout of a bullish descending trend channel. Thereafter, silver has a chance of moving higher and possibly exceeding the $18.84 peak from January 8. That peak is the high of the descending channel.

Short-term Price Support

Support was last seen at the $17.47 price area as it was the low Wednesday and silver turned higher at that point. Subsequently, price exceeded the prior day’s high and confirmed a bullish reversal. A 61.8% Fibonacci retracement of the prior upswing was completed once price reversed off the $17.47 low. When using Fibonacci ratio analysis, the 61.8% retracement level is the inverse of the 1.618% “golden ratio.”

Key Trend Lines to Converge

Certainly, the channel, which is a form of price consolidation, could continue to form over the next week or two with price remaining within the two parallel channel boundary lines.

Nonetheless, time is running out and momentum in silver should increase within the next one to two weeks. This is due to two key trend lines that will be converging within about two weeks, the downtrend line at the top of the channel and the long-term uptrend line below.

A move above the top line is the first signal for an upside breakout of the channel and thereafter we should see the long-term uptrend continue higher (from May 2019 lows).

Long-term Trend Line Support

If the long-term uptrend line is decisively breached, then that puts into question the sustainability of the uptrend. Keep in mind though that lines and price levels should be looked at as an area of price. Frequently, a price level might be exceeded a little bit and still hold once a move is complete.

A drop below the $17.07 low of the developing channel will also trigger a continuation of the descending channel to the downside. Just below the uptrend line is the confluence of several Fibonacci price levels where support may be seen if the $17.07 level is broken. They range from $17.01 to $16.80.