Early Bounce Faces a Key Confirmation Level
Although silver remained in a clear downtrend on Monday, there were early signs of a potential bounce. An initial bounce might signal strength relative to the short-term downtrend structure, but a reversal signal above the recent lower swing high of $63.28 is needed to suggest that the advance may continue. Silver remains below key long-term trend indicators, including the 200-day moving average at $70.65 and a rising trendline, with that area emerging as a potential upper target if the advance continues to unfold.
A Larger Downtrend Still Defines the Path
Since silver remains within a downtrend structure, as reflected in the larger falling trend channel on the charts, some consolidation or a pullback may occur initially. However, a reversal from the lower boundary of the channel opens the possibility of an eventual move toward the upper boundary of the channel.
The potential significance of the 200-day moving average as an initial key upside target zone is enhanced by the confluence of several indicators including an uptrend line, the 100-day moving average at $70.94, which has now aligned with the 200-day average, the 50% retracement of the prior advance at $72.08, and a lower swing high of $71.56. Together, these indicators suggest that the $70.65 to $72.08 price zone is an area where strong resistance is likely.
Resistance Confluence Could Draw Price Higher
That confluence can play a role in how an advance might unfold, as the price zone can act like a magnet for price. Nonetheless, sellers continue to dominate the underlying price action, although there are early signs of a short-term shift in momentum. There has been one leg up from the $54.78 corrective bottom established two weeks ago, reaching a high of $60.94 last week. The week ended with a higher weekly low and higher high, reflecting short-term strength on the higher timeframe. Moreover, support has held, helping reinforce the potential for a near-term continuation of the advance.
Monday Reversal Signals a Test of $63.28
A slightly higher swing low was established on Monday, as silver strengthened to a three-day high near $60.10, triggering a one-day bullish reversal above Friday’s high of $58.99. That suggests the potential for continuation of the advance to a higher high, above $60.94. The advance also put silver above its 20-day moving average, now near $58.82, for the fifth time in as many days.
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See all Silver forecastsThat shows an attempt to reclaim the average, but the repeated tests have so far failed to produce a decisive breakout, leaving downside risk. For the potential bounce to develop into a more meaningful advance, silver will ultimately need to overcome the $63.28 lower swing high. Until then, the larger downtrend remains intact, with the $70.65 to $72.08 resistance zone offering a much more significant test if the short-term strength can persist.
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