Channel Top Reversal Pressure Builds
Silver rallied to a 44-day high of $89.38 last week before reversing sharply to the downside. That high was near the 50% retracement of the prior decline. A pullback low of $73.86 was established after a brief undercut of the lower uptrend line of a small rising channel. If the session closes above the line, then a quick recovery of that support zone will be complete. However, downward pressure remains given the failure of support near major moving averages on the way down and a fall back into a larger rising channel structure. Last week’s rally triggered a new breakout signal from the channel structure.
Pivot Point: Breakdown or Stabilization
This leaves silver in a pivotal position to either continue to strengthen or correct with additional bearish price action. A decisive decline below Monday’s low of $73.86 implies that the current move is continuing as a bearish correction phase. That assessment would be confirmed on a drop below the recent higher swing low of $70.87. Lower targets would then be near the 200-day moving average, near $65.06 and rising. It is now above the prior spike low support of $64.06 from February and above the corrective low of $61.01 that was reached in March.
Rebound Attempt at Channel Support
On the upside, silver looks set to generate a bullish hammer candlestick pattern for Monday, poised near support of the lower channel boundary line. Although the moving averages show continued downward pressure, a bullish reversal signal above Monday’s high of $78.20 would also reclaim both the 20-day and 50-day moving averages and put silver on track to retest higher price levels. A sustained recovery above the top channel line would provide a sign of strength that suggests higher prices from there may be tested.
Weekly Structure Signals Caution
The weekly chart provides some clarity. It shows a bearish shooting star candlestick pattern from last week with a close at the low of the period. A decisive decline below last week’s low of $75.74 triggers the bearish one-week pattern, which occurred on Monday. However, it was not decisive given the recovery of trendline support and the emerging bullish daily pattern.