Silver (XAGUSD) Price Forecast: Bullish Momentum Builds After Weekly Breakout

Silver completed a pullback to test support on Monday at a falling trendline that marks the top of a bull wedge pattern. An upside breakout of the wedge triggered last Thursday. It was confirmed by two daily closes above the line and an interim lower swing high at $36.84. In addition, last Thursday’s advance also reclaimed the 20-Day MA at the same time. Therefore, a pullback earlier in Monday’s session successfully tested support at the top boundary line of the wedge, as well as the 20-Day MA, now at $36.41. Volatility spiked for the day as indicated by a wide range that encompasses the daily trading range of the prior two days.

Bull Wedge Breakout Confirms

Since it looks like the bull wedge breakout may have completed the first daily pullback today, silver could be ready to move higher as the bull trend progresses. A decisive rally above today’s high of $37.23 provides the next sign of strength. That would put silver in prime position to trigger a continuation of the bull trend on a new trend high above $37.32.

A new high target zone is marked by a confluence range from $38.46 to $38.61. Note that the price zone is in the area around a top rising long-term channel line, and near the midline (dashed) of a shorter rising trend channel. Depending on when and if the price zone is eventually reached, the two lines can also provide clues to price action.

Weekly Bullish Signal May Dominate

Last week was the highest weekly closing price for silver since September 2011. The advance earlier on Monday triggered a weekly breakout above last week’s high of $37.08. That established the potential for a continuation of strength indicated by that rise. It is important to consider that a bullish reversal on the weekly chart was triggered last week as well.

Subsequently, strength was confirmed by a weekly closing price above the prior week’s high and a close in a relatively bullish position, near the high for the week. This is bullish behavior on the larger time frame. Therefore, the breakout of a bull wedge within the parameters of an advancing trend channel, and bouncing off support of the 20-Day MA, are all signs that buyers are taking more interest in silver.

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