Potential double bottom established
Last week’s low of 29.64 was the second low recently. It led to a quick bullish recovery that day and the next day (Friday). This established a second bottom of a potential double bottom pattern. If silver strengthens from Friday’s high and continues to rise, it has a chance to activate the double bottom pattern.
An upside breakout is triggered during a rally above the neckline at 31.54. Note that the 50-day MA, which also marks a pivot level, is currently at 31.76, slightly above the neckline. Another view of the current price range can be seen in the weekly chart (not shown), as it shows a three-week high of 31.54 and a low of 29.64.
Maintain support
Looking at the bigger picture, after reaching a trend high of 34.87 on October 22, silver began to resume its previous advance. That high appears to have completed a bullish five-wave Elliott Wave structure. Support was then seen at 29:68 on November 14 and at 29:64 last Friday. Last Friday there was a retest of support around the 61.8% Fibonacci retracement. Furthermore, support has been observed around the trendline at the top of the previous retracement channel starting from the top of wave 3 at 32.52. In other words, that’s a full cycle back to previous trendline resistance that marked a bullish breakout price level.
A break below 29.64 could be lower
Regardless of the above bullish scenario, a decisive drop to 29.64 will indicate a possible continuation of the bearish trend. Potential support then appears to be within a range of around 29.24, the 78.6% retracement, and the 200-day MA, now at 29.15. Lower prices could also be in the works if weekly lows fail to provide support.
For a look at all of today’s economic events, check out our economic calendar.