Last week, we saw silver make a bullish breakout above a key triangle resistance. We will return to this below, but first let’s monitor this week’s price action.
After starting the week with a push to 17.77, silver retreated to 16.87 ahead of today’s (5/20) session. There was some consolidation around 17.00, then towards the second half of the US session, traders lifted the precious metal higher. Even though the bullish momentum was lost, silver still shows some bullish bias in the 1H chart as price holds above the 200-hour SMA.
Now, the intra-session bullish breakout is not clear. In the near-term, there is still bearish bias because price is under the 100-, and 50-hour SMAs and the RSI held below 60. If will take a push above 17.40 with the RSI climbing above 60 to show a bullish continuation attempt.
Let’s turn our attention to the daily chart where we saw a strong bullish breakout from a multi-month triangle pattern.
The prevailing trend before the triangle pattern was bearish, so the bullish outlook from the breakout should be limited to the triangle high at 18.47. However, before getting there, it seems like the market wants to test whether the breakout can extend. The 5/19 bearish candle was strong and suggests some short-term bearish correction.
The 1H chart above showed that a break below 16.87 would likely extend the current bearish correction. The daily chart shows that if the market is to remain bullish, traders should support silver price around 16.50. Here we have a combination of support factors:
1) The broken resistance would be tested as support.
2) The 50-day SMA is around 16.50
3) There is a rising trendline from the end of April.
A break below 16.50 might invalidate the bullish breakout and put pressure towards the triangle support. Otherwise, the bullish breakout should remain in play above 16.50, with upside risk at least towards the 18.47 high.
Previous Post by Author: USD/CAD Puts in a Price Top After LackLuster FOMC Minutes