Silver (XAGUSD) Price Forecast: At Decision Point Between Channel Rebound or Breakdown

Silver continued to test support around a rising trend channel line on Monday as it fell to a seven-day low of $37.91. Selling was muted however as indicated by the relatively narrow daily range of $37.91 to $38.34, and the possibility of a doji candlestick pattern. This shows diminished selling pressure but with a lower daily high and lower low.

There is also potential dynamic trend support near the trendline, around the 20-Day MA, now at $37.73. If silver remains above the 20-Day, it will retain the price structure of the current uptrend that began from the April swing low.

20-Day Trend Support at $37.73

Notice that the 20-Day MA represents support that is higher than the most recent higher swing low at $37.54. Together with the prior trend high of $37.32 from mid-June it identifies part of a potential support zone from $37.54 to $37.32. If the 20-Day MA fails as support, that price range is the next lower zone to watch for possible support.

One-Day Bull Reversal Above $38.34

A one-day bullish reversal will be indicated on a decisive rally above today’s high. That would show a reversal from support at the lower trend channel line, and it could eventually lead to new trend highs. The bull trend may then be ready to continue towards higher prices with Friday’s high of $39.20 being the first upside target. If it subsequently fails as support, the lower 50-Day MA, now at $36.22, becomes a target.

Bull Trend Channel

In the bigger picture, notice that resistance was seen twice recently around a top channel line of a long-term rising trend. The lower trendline of the channel touches the February 2024 swing low. So far, the recent attempts to break out of the channel have failed. If the failed breakout is further confirmed by a sustained decline below $37.54, then the bearish reversal from the top of the channel has the potential to eventually test the lower line of the channel. Regardless, selling pressure will likely intensify.

New Trend High Remains Possible

A decisive bull breakout to a new trend high above $39.53 will provide another breakout attempt from the rising channel. This time it could be successful and will put silver in a position to approach the next two upward targets, at $40.20 and $40.95, respectively.

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