Silver (XAGUSD) Price Forecast: Consolidates Below High, Eyes Breakout Toward $38.61

Last Monday’s high of $36.89 remains the trend high for silver, as it has consolidated near that high since then. A pullback to support at $35.46 completed last Thursday before buyers stepped in and drove the price to a strong close and ending with a one-day bullish momentum hammer candlestick pattern. The high almost reached the initial target for a rising ABCD pattern at $37.05. Nonetheless, the confluence of several Fibonacci levels identifying potential resistance are also near the high. A relatively mild bearish pullback following the $36.89 high is a sign of strength, while a stall of the advance in a resistance zone shows the potential for resistance to eventually lead to a deeper pullback.

Silver Recent Holds Gains

Notice that the minor pullback and consolidation of the past week is starting to take the form of a potential bull flag or pennant pattern. That is one potentially bullish scenario that could unfold over the next week. And it assumes that support at last week’s low of $35.46 is retained. If it is not, then a pullback to a potential support zone from the prior trend high of $34.87 to $34.59 looks likely. Potential support in that price zone is strengthened by the 20-Day MA, which is included in the range, at $34.64 currently.

Retains Strength, while Risk of Dip Remains

In the near-term, a decisive rally above Friday’s high of $36.64 would be a sign of strength that could lead to a new trend high on a rally above $36.89. If the $37.05 potential target noted above is exceeded, the next higher target zone looks to be around the confluence of several price levels that range from $38.46 to $38.61. Although in the short-term silver shows the potential for an extended advance, it also broke out of a long-term sideways basing pattern only last week. The base breakout is supportive of the potential for silver to eventually reach the next higher target zone.

Key Support Zone at $34.87 to $34.59.

A pullback to test support around the top of the base ($34.87 to $34.59) would be normal and expected. Also, a new high rally on a move above $36.89 sets the stage for a move to the higher $34.46 target zone. Notice that the base breakout was confirmed on a weekly basis by last week’s closing price above the prior high of $34.87.

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