Backdrop: Silver has been bullish at the turn of the year after falling for most of the second half of 2014. In 2015, it rallied to 18.47 before retreating as we can see in the 4H chart below:
Wedge Breakout: We can argue that the structure of this bearish correction/consolidation was a falling wedge. Price did break below the 200-, 100-, and 50-period SMAs and the 4H RSI did dip below 30, all signs of bearish development. However, as we ended the week, price rallied above the falling wedge resistance, and is now threatening to return back above the all of the noted SMAs. The 4H RSI has broken above 60, which shows loss of the prevailing bearish momentum.
Resistance: Silver looks ready to shine again, and continue its recent bullish mode. The first challenge will be in the 17.60-70 area, especially if the 4H RSI reaches 70. Then, let’s see what kind of reaction follows. If price is able to hold above 17 or so, the bullish outlook should remain in play with pressure to break the 17.70 resistance and push to the 18.45-50 highs.
Strong Evidence of Bullish Continuation:
The daily chart has a more convincing picture for the bullish continuation outlook. Note that price action has been projecting a rising channel since marking the 2014-low at 14.65. The rising channel support held again.
Furthermore, price held above the 100-, and 50-day SMA after crossing over them – a bullish slingshot signal. Momentum-wise, the RSI has tagged 70, and is now holding above 40, which reflects development of the bullish momentum.
Indeed, the daily chart puts the 18.45-50 area in sight. A break above this area, puts silver into another phase of this bullish “trend” because price would be above the 200-day SMA, showing another “win” by silver-bulls. At that point, 20 would be a reasonable target.
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