Bullish Hammer candle is being set
Note that Friday’s candlestick pattern takes the form of a bullish hammer, providing additional evidence for a possible continuation of the rally. But first a trigger above Friday’s high is needed. Strong demand exists if the uptrend continues after a relatively shallow 38.2% retracement, as this reflects strong underlying demand. Buyers don’t want to wait for lower prices and risk missing out on the next higher price.
The next higher goal starts on 35.13
A decisive rally above 34.02 will put silver in a position to test resistance around the recent high of 34.87. If this is breached, there is a potential resistance zone near 35.13 to 35.38. That price range starts with the 200% extended target (D) for a bullish ABCD pattern (purple). It includes a long-term Fibonacci retracement level of 61.8% at 35.23.
This reading is the extended retracement of the downswing that started from the April 2011 peak at 49.81. The target range ends with the completion of a small ascending ABCD pattern (not shown). Given the long-term nature of the 35.23 price level, special attention should be paid to this. If resistance is seen, it may last for a while, and a breakout indicates likely higher prices in the short term.
Support Reported on 33.09
On the other hand, a drop below Friday’s low of 33.09 signals a deeper pullback. It appears that the lower support is around the confluence of several indicators, near a range of 32.49 to 32.31. These prices consist of the 50% retracement and the 20-day MA respectively. Next, the 61.8% Fibonacci retracement is at 31.93 and there is support there. Also keep an eye on the internal uptrend line for possible support.
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