Silver (XAGUSD) Price Forecast: Bears Hold, Key Support Tested

Sharp Bearish Reversal and Key Support Levels

Silver completed a sharp bearish reversal last week. A bearish weekly engulfing and drop to a three-week low of $73.31 confirmed that the sellers were in charge. This has likely established a high for now in the price of silver. Support was seen at a key intermediate trend level marked by the 50-day average before a bounce. During Monday’s session, downward pressure remained, leading to a slightly new retracement low of $71.32.

It is interesting to note that the new low found support near an Anchored Volume Weighted Average Price (AVWAP) indicator from the October swing high. Silver is set to close the day’s session above the 50-day average for the second day, further confirming it as a trend support boundary.

Daily Range and Potential Short-Term Bottom

The dip to a new daily low eliminates the potential for a bearish inside day to set up. A daily close above the middle of Monday’s range shows buyers increasing their interest in the precious metal. The middle of the range is $79.64. This is mentioned since a close in the upper half of the range, along with the other bullish signs, suggest that at least a short-term bottom may have been established at $71.32. If silver can continue to trade above the 50-day average, signs of accumulation should be seen, followed by higher prices to test prior support as resistance.

Confluence of Resistance Levels and Moving Averages

There is the confluence of several levels pointing to possible resistance near the internal uptrend line and the 20-day moving average trend indicator at $92.95. Since the lines have converged, the 20-day average provides a more specific price to watch. The 20-day average provided a lower boundary for the short-term rising trend until it failed last Friday.

Outlook: Support Holds While Resistance Caps Near-Term Upside

Note that the high-to-low range on Friday was negative 37.6%. That provides a wide range for silver to trade within, before it goes anywhere. Today, silver tested the lower end of the weekly range, and it held, leading to a bounce. Price discovery is likely to lead to a test of resistance near the 10-day average at $100 currently. But until there is a daily close above the 20-day average, the expectation is that strength will encounter strong resistance, leading to further tests of support near the 50-day average.