Silver (XAGUSD) Price Forecast: Bullish Reversal in Silver After 78.6% Pullback

Silver retraced approximately 78.6% of its prior upswing last week with a low of $36.21. That low was also in the middle of a previous three-week consolidation range and near the 50-Day MA, now at $36.62. On Monday, a bullish reversal from an inside day triggered and the two-day high of $37.27 was exceeded to reach a high for the day of $37.48.

A higher daily high and higher low will be established for the first time since the recent trend high of $39.53 was reached. These are signs of a potential bullish reversal anticipated to advance up to test the 20-Day MA as resistance, at a minimum. The 20-Day line is now at $37.90.

50-Day Moving Average Key Trend Support

Until proven otherwise, a bounce off the 50-Day MA is likely to lead to a test of prior support as resistance levels, starting with the 20-Day MA. There is then a very minor lower swing high at $38.34, which is also last week’s high. A rally above that high, followed by a daily close above it, would be needed to begin to improve the bullish outlook, as that would signal a reversal of the short-term downswing. Otherwise, indications of resistance could lead to another pullback and test of support around the 50-Day line. Also, be aware of the prior trend support line at the bottom of a rising trend channel. It now represents potential dynamic resistance on the way up.

Consolidation on Longer Timeframe

This week is the second week following a weekly bearish reversal of a shooting star candlestick pattern that formed following a new trend high of $39.53. There was a relatively wide trading range for last week and therefore this week silver will likely remain within that range with potentially choppy trading as seen in consolidating markets.

Monthly Shooting Star Candlestick Pattern

Moreover, on the monthly chart, silver will be trading within July’s range until it breaks above $39.53 or below $35.80. That is a relatively wide range that could encompass trading for this month if not longer. This is something to be aware of as the monthly chart for July shows a potential bearish shooting star candlestick pattern.

Since it is on the monthly, a sustained decline below that level could lead to a drop that eventually reaches the lower trendline of an ascending channel. The shooting star shows selling pressure on the larger timeframe and represents potential resistance for silver if it can keep rising.

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