Silver Trading in a Bullish Channel and Ascending Triangle

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Silver Trading in a Bullish Channel and Ascending Triangle

Shifting Mode: Silver has been bullish so far in 2015, rallying from around 15.50 to 17.20 before stalling this week. When we look at the daily chart, we can see that the medium-term mode has shifted from a bearish market to a sideways one with a short-term bullish outlook. The breakout seen in early December has been confirmed when price found support around 15.50 at the turn of the year.

Silver daily chart 1/16
silver daily chart 1/16
(click to enlarge)

Targets: The daily chart shows a couple of potential targets. First the 17.30 resistance pivot from December is the near-term resistance which is basically being tested at the moment. It is also the 38.2% retracement level.

Above this current resistance, the next key level will be around 18.00. There was a resistance pivot around 17.80, and the 50% retracement around 18.10.

When we drop down to the 4H chart, we can see that the market is bullish right now.

Silver (XAG/USD) 4H Chart 1/16
silver 4h chart 1/16
(click to enlarge)

Bullish Development: We can see a double bottom at the turn of the year, after which price has been trading in a rising channel. The moving averages have gotten into bullish alignment and price has been trading above them. The RSI has been able to hold above 40 and tag 70, a sign of bullish persistent momentum.

Bearish Scenario: The 4H chart shows that if price falls back below 16.50, it would break a support/resistance pivot area, which would be the first sign that the bullish attempt has ended. If the RSI falls below 40, that would show loss of the bullish momentum so far in January. A break below 16.20 would be another blow to the bullish outlook, and would put the pressure back on the 15.50-60 lows as well as the 2014-lows around 14.65.

When we look at the 1H chart, we can see that the favored outlook is the bullish one.

Silver (XAG/USD) 1H Chart 1/16
silver 1h chart 1/16
(click to enlarge)

An ascending triangle in an uptrend has a bullish bias, especially when we can see price holding above the SMAs, and the 1H RSI holding above 40 for the most part. Price again bounced off the triangle support and the 100-, and 50-hour SMAs as we got started in the US session this Friday. Silver looks poised to test the 17.20 area, then test the 17.30 resistance area with upside risk towards the 18.00 handle next week.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.