Transactions within a descending trend channel
Keep in mind that silver is in a downtrend. Therefore, a continuation of the advance would be a counter-trend rally within a larger bearish correction. The expectation would be that resistance will eventually emerge that is aggressive enough to push the price back down, which would lead to further declines in the price of silver, but not necessarily new corrective lows.
There is a previous weekly high at 28.75 and the 50-day MA at 30.93. Both price areas may encounter resistance. The upper trendline for a descending channel also marks an area of potential resistance. In that regard, a horizontal line has been added to the chart where two trend lines intersect at 31.15, one rising and one falling. It represents potential resistance and will take on a slightly different meaning depending on when it is approached.
Looking at force confirmation
The fact that buyers were aggressive enough to trigger a double bottom breakout and a 200-day MA breakout at the same peak indicates that the strength should continue toward higher prices. Silver was at risk of further declines in the near term after falling below the 200-day line on December 18. Nevertheless, corrections can sometimes be resolved with relatively lateral movements rather than by a continuation of the corrective movement.
That could be the situation with silver, at least in the short term. As noted, the 200-day line has recently been recognized by the market and therefore a daily close above it offers a bullish sign and a potential recovery above support for the long-term trend. Silver has been above the 200-day line since it was recovered in early March last year.
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