200-day MA shows weakening
Once previous support is tested as resistance, the bear trend in the case of the 200-day line shows signs that it could continue. Silver has been trading above the 200-day MA since it was recovered in March this year. It then remained above the line until dropping below it on December 18. In addition to silver’s inability to subsequently rise and stay above the 200-day line, it was also unable to close above the line except for one day since the breakdown.
This bearish price behavior reduces the chances of a quick retracement of the 200-day line before prices fall. Nevertheless, another bearish signal is needed to further confirm the bearish trend, with a drop below 28.75.
Rejection of the top of the channel can lead to a test of the lower trendline
Given the recent bearish signs around the 200-day MA, the larger ascending trend channel should be taken into account. The lower channel line starts on September 1, 2022 and the upper line is copied to the top of the related ascending parallel trend channel. Note that there were two failed bullish breakout attempts through the top of the channel in 2024, one in May and the other in October. Although the second breakout generated a higher swing higher, it could not be sustained and was followed by the current correction.
Lower objectives Start with 28.28
The bearish scenario would start to change after a rally above the seven-day high at 29.90. But until then, lower potential support levels are expected to be tested. Given that there has been consistent bearish behavior following the October 22 swing high, there is a possibility that silver could eventually test support around the lower channel trendline. Nevertheless, the channel increases the probability of reaching lower targets before the bearish correction is completed.
A 78.6% retracement level is at 28.28 and this is the next lower price level we should pay attention to. Then there’s the 27.11 target from a bearish ABCD pattern (purple), followed by an earlier price structure and the 61.8% retracement of a bigger move higher, at 26.11. The lower level is around the lower ascending channel line.