Silver Hits Record High as Momentum Begins to Fade
The price of spot silver turned lower on Monday following a new record high of $117.75, reached earlier in the session. A 261.8% Fibonacci extension target was surpassed during the advance, while sellers subsequently showed up near the completion of a measured move that ends at $119. The measured move identifies when the current advance that followed a key breakout matches the prior upswing of the previous advance, on a percentage basis.
Measured Move Completion Signals Potential Exhaustion
On December 9, silver broke out of a six-day tight range and the top of a rising trend channel, beginning the first measurement. The second breakout began at the prior high of $84.03. Although the day’s high didn’t quite match the higher target, given the bearish reaction, it was close enough to satisfy a completion. Each measured move shows prices rising by 41.6% from the breakout level.
Bearish Price Action Emerges Near Upper Range
A bearish reaction followed the $117.75 high, pushing silver into the lower half of the day’s range, which is where it remains at writing. The middle of the day’s range is at $110.53, while the lower third of the range begins at $108.12. News of the sharp advance in silver is all over the news and no longer a secret to anyone. Whether today’s high turns into an important top or not, price action is showing weakening momentum, with the odds turning towards a likely correction of some degree.
Shooting Star Setup Raises Risk of Pullback
If silver closes in the lower third of the Monday’s range, a potentially bearish shooting star candle will be formed. That will set up a bearish trigger on a drop below today’s low of $103.30. The MACD indicator in confirms the extreme overextension of price that was seen in silver. Significantly higher than at any time in at least 10 years.
Downside Targets Defined by Key Moving Averages
If the shooting star triggers, an initial downside target is the 10-day average, currently at $95.34 and falling. The reaction near that indicator will provide clues as to what might be next. Of course, a failure of the 10-day line as support puts lower targets in sight. Specifically, the 20-day average and the prior trend high at $86.24 and $84.03, respectively.
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