Ever since breaking out above $25.50, silver has been in a technical breakout. In my last article highlighting this break, I spoke about silver taking out a resistance zone which had been held since August 2021.
The metals continue to do well in this current market environment… even with some pop in yields and the US Dollar.
Palladium is lacking, but that is a story for some other day. Technical traders probably like what they are seeing on it.
But let’s stick to silver. Let’s start with the bigger picture.
The weekly chart was highlighted in my past article. Spoke about the major trendline break and retest which was our clue that silver was likely to breakout above the major resistance zone at $25.50. You can see that we are now testing a major resistance zone. The top portion of my resistance zone is $28.50.
With my technical analysis eyes, it looks like a higher low is being formed here on the weekly meaning silver is likely to breakout above this resistance zone.
The $25.50 zone remains major support.
The daily chart shows the current price action attempting to make a run to penetrate and break our major resistance zone. My moving averages are also being held and continue to be upward sloping.
For those wanting to play the intraday charts, you probably see a very promising structure. A very broad inverse head and shoulders pattern. Yes, it looks very bullish.
Intraday traders played the breakout above $27.50, which would be our intraday support level.
At time of writing, silver is seeing a battle here in our resistance zone but the bulls continue to jump in. Once again, if there is a pullback from this resistance zone, then $27.50 is our support.
Let’s take a quick peek at the US Dollar as it can give us some hints to upcoming price action on the metals.
A very simple breakdown and retest play here with the dollar breaking below 105.50 and sellers jumping in on the retest. If today’s daily candle closes as is, it would be printing an engulfing candles at the retest zone. This would attract more sellers with technical traders placing their stop loss above this candle.
But there is another chart which is indicating pretty bullish silver price action.
Many silver bulls have been watching the gold/silver ratio. When this chart heads down, it means silver is gaining and outperforming gold. The above chart is the weekly chart of XAU/XAG. A major breakdown of this trendline could be confirmed by the end of this week. This means we could be seeing bullish price action on silver which translates to silver breaking above the major resistance zone I have marked on my silver chart.
I have not forgotten about you gold bulls!
Gold has risen on the breaks of the previous two flag/triangle patterns that I have left on my chart above. Gold could be breaking out above another trendline with a daily candle close today. Ideally, this would be accompanied with a close above $2338. This would take out the triangle, resistance and the current lower high. Overall, this means a continuation in the uptrend.
Even the intraday traders have their eyes on this major trendline break as the hourly chart shows that buyers stepped in on the retest.
It looks bullish for gold and silver, and with the dollar currently rejecting 105.50, we could be seeing another strong leg up soon.
Happy trading.
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