Silver (XAGUSD) Price Forecast: Nears Breakout; Long-Term Chart Signals More Upside

Silver rallied to a five-day high of $39.04 on Monday and it is on track to break above the prior trend high of $39.13 from last Monday. A relatively shallow pullback completed last week at a low of $37.50, before demand started to improve. That pullback completed a successful test of support around the previous trend high resistance zone from June. Also, notice that the area around the lower rising channel line was also tested as support. That follows several bounces from support around the trendline earlier this month.

Bull Channel Intact

Since the April swing low, silver has been advancing within a rising trend channel. Support was clearly seen around the lower line of the channel recently, and so the top of the channel has become a potential target. Of course, a new trend high breakout above $39.13 needs to happen first. Silver is currently in the third leg up of the bull channel.

If the third leg up matches the percentage advance seen in the second leg, it would peak at around $40.69. That price area is also marked by the convergence of two Fibonacci extension targets around $40.86. Nonetheless, higher potential targets indicated by the bull channel would remain.

Above $39.13 Points Higher

A decisive rally above the prior trend high at $39.13 will also signal a breakout of another top rising channel line. Today’s advance stopped around that line. It is parallel to the long-term uptrend line that begins from the 2022 lows. If silver can sustain a breakout above that line, it will provide another sign of strength.

Long-term Bull Pattern in Play

In the bigger picture, silver has been tracing out a large cup basing pattern with a left side high of $49.81 from 2011. Therefore, it is heading towards a likely eventual challenge to that high. Nonetheless, there is a large bull flag pattern that can be measured starting from the 2020 lows. It indicates potential resistance areas on the way towards $49.81. Assuming the flag breakout level was $26.09, a potential target is indicated around $41.7.

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